Today - Monday, August 31, 2015
- SanDisk (NASDAQ:SNDK) has received a lift from vague rumors that it has hired a bank after receiving a buyout offer. Speculation regarding potential buyers once more centers around Seagate and Western Digital, who have made a slew of smaller flash-related purchases as SSDs continue taking share from hard drives.
- SanDisk also rose in April on speculation Western could make a bid. Shares are down 44% YTD, and trade for just 9.6x 2014 EPS of $5.60. The 2015 EPS consensus is at $3.13, and the 2016 consensus at $4.32.
- Separately, SanDisk has announced (at VMware's VMworld conference) a new version of its FlashSoft enterprise SSD caching software that integrates with VMware's vSphere 6 server virtualization platform, and reference architectures for VMware's VSAN storage virtualization platform that leverage SanDisk's SSDs and Fusion-io PCIe flash modules.
- Coal companies (NYSEARCA:KOL) continue their apparent short-covering rally, even as J.P. Morgan cuts its coal price forecasts, expecting excess production capacity built in recent years to keep downward pressure on prices in a mirror image of the late 2000s when capacity shortages drove prices higher.
- Even where capacity is forced to pause, much of it could be brought back quickly, which is acting as an overhang, the firm says.
- ACI +19%, BTU +8.8%, CLD +6.4%, WLB +3.1%.
- Southern Copper (SCCO -2.2%) is downgraded to Neutral from Overweight with a $31.50 price target, cut from $37, at J.P. Morgan, which cuts its 2016 estimates for nickel by 53% to $8,750/ton and for copper by 30% to $4,400/ton because of persistently weaker commodity demand.
- While SCCO has growth potential, given its several brownfield and greenfield projects, the firm thinks investors could get exposure to the same copper growth story at more reasonable prices through its parent company, Grupo Mexico (OTCPK:GMBXF).
- Pleasant Lake Partners, which currently owns 9.9% of MagnaChip (MX +5.7%) has offered to buy the Korean analog/mixed-signal chipmaker for $10/share in cash (roughly $345M). The offer is "subject to confirmatory due diligence and the negotiation of definitive transaction documents." (13D filing)
- Pleasant Lake: "[T]he accelerating pace of consolidation in the semiconductor industry, coupled with what believe are Magnachip’s strategically valuable assets and intellectual property, has led us to make this Proposal. We have consistently heard from other shareholders that the status quo at Magnachip is not acceptable and that the Company, in whole or in part, would be worth significantly more to strategic acquirers than as a standalone entity."
- MagnaChip has risen to $8.17. Pleasant Lake's proposal letter offers few details on how a purchase will be financed. The firm has previously argued MagnaChip's fabs and IP have value to potential acquirers.
- Last month: MagnaChip exploring strategic alternatives, including potential sale
- The FDA approves an amendment to the stopping rule criteria for Sunshine Heart's (SSH +13.6%) Phase 3 COUNTER HF study that changes "all cause" deaths to deaths specifically related to the device, procedure or therapy. The change reduces the risk that the trial is paused again due to mortality events.
- The final data collection date for COUNTER HF, with an estimated enrollment of 388 subjects, is April 2016. The estimated study completion date is April 2017.
- ArcelorMittal's (MT -3.8%) South African unit says it is planning to shut two mills and review operations at its largest plant in the country, as the money-losing unit struggles with weak demand and lower prices.
- MT says it has started discussions with unions about the closure of two mills, cutting as many as 400 jobs, at its plant in Vereeniging, and that operations at its largest plant, at Vanderbijlpark, remain unprofitable and will be reviewed before the end of October.
- South Africa's government last week raised the import tariff on steel to 10%, the maximum level allowed by the WTO.
- Goodrich Petroleum (GDP -5.7%) is trading lower after announcing after Friday's close that it is suspending dividend payments on preferred stock.
- GDP says it suspended dividends for the September quarter on its 5.375% series B cumulative convertible preferred, 10% series C cumulative preferred and 9.75% series D cumulative preferred stock.
- If GDP does not pay dividends for six quarterly periods, whether consecutive or non-consecutive, the holders would have the right to elect two additional directors to serve on GDP's board until all accumulated and unpaid dividends are paid in full.
- Phillips 66 (PSX +2.7%) opens with strong gains despite sharp losses in the broader energy sector (XLE -1.1%), after Berkshire Hathaway reveals a new 58M-share, $4.5B stake that makes it the top shareholder in the largest U.S. oil refiner.
- Warren Buffett’s commitment to PSX might look like a case of buying at the top, as factors such as wide spreads between prices for U.S. crude and refined products on global markets have made the past several quarters some of the most profitable ever for U.S. refiners and stocks of refining companies have enjoyed a strong YTD rally.
- But Heard On The Street's Spencer Jakab says many non-refining businesses within PSX, such as its midstream unit, are substantial and stand to benefit if beaten-down oil and natural gas prices rebound, and that Buffett actually is making his own bet on energy infrastructure.
- Berkshire’s stake is too large to be a simple portfolio move and looks more like a strategic step, Jakab writes, perhaps a shares-for-assets swap for assets complementary to BRK’s existing infrastructure that offer steady, utility-like returns, rather than the refining units that are all the rage.
- Gordon Brooks, Aerohive's (NYSE:HIVE) CFO since early 2013, is leaving to "pursue other opportunities." John Ritchie, previously the CFO of software tool developer Telerik and networking hardware firm Ubiquiti Networks, is replacing Brooks.
- Aerohive uses the announcement to state it expects Q3 revenue to be at the high end of its $40M-$42M guidance range. Consensus is at $41.3M.
- Ahmad Chatila bought 9,700 shares last Friday at $9.92, bringing his total stake to 845,672.
- CFO Brian Wuebbels and several directors have also bought shares since Aug. 21. Wuebbels (50K shares) has made the largest purchase.
- SunEdison (SUNE +1%) remains down 69% from a July peak of $33.45. SA author Chris DeMuth, Jr. recently noted over 2/3 of SunEdison's equity was owned by hedge funds (Greenlight Capital, Lone Pine Capital, etc.), by far the highest concentration among top-50 hedge fund investments. "So, when hedge funds want to de-risk, SUNE... trades off by 60%. In such circumstances, the price system breaks and it is nearly impossible to discover a rational clearing price. However, the process can also run in reverse."
- Indian wind turbine maker Inox Wind has placed a $40M order for American Superconductor's (NASDAQ:AMSC) turbine electrical control systems. Shipments are expected to begin this quarter, with "the vast majority" expected to be finished by the end of FY15 (ends March '16).
- Inox placed a $15M order with AMSC a year ago. $6M worth of Asia-Pac grid product orders were announced last week.
- In a statement issued this morning, iKang Healthcare Group (NASDAQ:KANG) announces that it has received a non-binding proposal letter from a group of investors led by Founder, Chairman and CEO Ligang Zhang to take the company private for $17.80 per ADS in cash. According to the letter, the investors intend to fund the deal with a combination of debt and/or equity capital and rollover equity in the company.
- The board of directors intend to form a special committee to evaluate the proposal.
- KeyBanc Capital Markets sheds its bearish view on Bob Evans Farms (NASDAQ:BOBE) by upgrading the restaurant stock to a Sector Weight rating after having it mired at Underweight.
- Shares of Bob Evans are down 11.5% over the last month, a swing which Keybanc thinks factors in much of the near-term downside.
- BOBE +3.21% premarket to $45.00.
- Nano cap Vital Therapies (NASDAQ:VTL) is up 20% premarket on healthy volume in response to its announcement of additional data from a Phase 3 study, VTI-208, of the cell-based therapy ELAD (Extracorporeal Liver Assist System) in patients with end-stage liver disease. The results were presented on Saturday at the 16th International Symposium on Albumin Dialysis in Liver Disease in Rostock-Warnemunde, Germany.
- The press release includes a table summarizing the impact of ELAD versus control on overall survival in two pre-specified subsets of patients. The table is a bit confusing, but is notable in that all results fell short of statistical significance.
- Over eager punters appear to need another cup of coffee this morning.
- Exelon (NYSE:EXC) and Pepco (NYSE:POM) say they will continue to push their merger proposal after D.C. utility regulators rejected the $6.8B deal last week, arguing that it would offer long-term benefits to their customers and is in the public interest.
- The companies issue their joint statement in response to the D.C. Public Service Commission, which denied their application to merge and said it was not in the best interests of ratepayers.
- EXC +9.8% premarket.
- Thinly traded nano cap BioLife Solutions (NASDAQ:BLFS) jumps 72% premarket on average volume in response to its announcement that a Phase 3 clinical trial run by one of its customers, TiGenix NV, met its primary endpoint. The late stage study evaluated TiGenix's lead stem cell therapy candidate, Cx601, for the treatment of complex perianal (around the anus) fistula (abnormal connection between an organ and other structure) in patients with Crohn's disease. A single injection of Cx601 was statistically superior to placebo in achieving combined remission at week 24. TiGenix intends to file an MAA in Europe in Q1 2016 and initiate a pivotal study in the U.S. as soon as feasible.
- TiGenix employs BioLife's hypothermic storage and cryopreservation freeze media in its operations.
- According to Frost & Sullivan, the stem cell therapy market will grow to $180B by 2030.
- The Medicines Company (NASDAQ:MDCO) jumps 20% premarket on average volume in response to development partner Alnylam's (NASDAQ:ALNY) announcement that its investigational RNAi therapeutic, ALN-PCSsc, lowered LDL-C (bad cholesterol) up to 83% with a mean maximum reduction of up to 64% (+-5%) in an early stage study, results comparable to Amgen's (NASDAQ:AMGN) Repatha (evolocumab) and Sanofi (NYSE:SNY) and Regeneron's (NASDAQ:REGN) Praluent (alirocumab). The data were presented at the ESC Congress in London.
- What's notable in this case is the difference in dosing regimens. ALN-PCSsc was administered in one subcutaneous dose that was effective for over 140 days, giving it the potential for once per quarter or twice per year administration. Praluent is dosed once every two weeks and Repatha once every two weeks or once per month at a higher dose.
- ALN-PCSsc turns off PCSK9 synthesis in the liver. This is a different mechanism of action compared to Praluent and Repatha, both of which bind to PCSK9 in the blood.
- The Medicines Company will take the lead in developing ALN-PCSsc under the ORION Program. A Phase 2 study will commence by the end of the year and a Phase 3 trial is planned for 2017. The clinical development will include comparisons to the anti-PCSK9 monoclonal antibodies.
- The companies will host a conference call this morning at 9:30 am ET to discuss the results and their development plan.
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