Eldorado Gold (NYSE:EGO), Gammon Gold (NYSE:GRS) and Ivanhoe Mines (NYSE:IVN) are all in positive territory today, moving up with the broader gold market as investors flee to safety because of concerns over possible sovereign debt contagion in Europe.
The unusual event of the U.S. dollar moving up along with the price of gold is occuring again, as it had each time the fears concerning the sovereign debt crisis and uncertainty over the future of the euro are brought to the forefront recently.
As long as the story is headline news, that will probably be the case. The longer the narrative, the longer the two will move up together in general.
Eldorado Gold was trading at $17.43, rising by $0.52, or 3.08 percent as of 2:44 PM EST. Gammon was at $6.68, gaining $0.16, or 2.45 percent. Ivanhoe rose to $24.44, increasing by $0.25, or 1.03 percent.
Tuesday, November 30, 2010
Barrick (NYSE:ABX), Newmont (NYSE:NEM), Goldcorp (NYSE:GG) Up on Rebounding Gold Prices Today
Gold prices today are pushing up the share price of giant gold miners Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp Inc. (NYSE:GG), as fears surrounding the EU sovereign debt crisis and possible contagion has investors fleeing for safety once again.
As has happened other times during the ongoing gold bull market, the U.S. dollar and gold have abandoned their usual inverse relationship and have moved up together.
This will happen again and again as the ebb and flow of news concerning the sovereign debt challenges in the EU are released to the public.
It seems during these times gold will continue to rise, but will be held back because of the increased value of the U.S. dollar during these times.
Barrick was trading at $51.88, rising by $1.55, or 3.08 percent as of 2:35 PM EST. Goldcorp was at $45.78, gaining $0.70, or 1.55 percent. Newmont was at $58.84, up by $0.75, or 1.29 percent.
Interestingly, trading volume for all three didn't take off, as they are all slightly below their 3-month average.
As has happened other times during the ongoing gold bull market, the U.S. dollar and gold have abandoned their usual inverse relationship and have moved up together.
This will happen again and again as the ebb and flow of news concerning the sovereign debt challenges in the EU are released to the public.
It seems during these times gold will continue to rise, but will be held back because of the increased value of the U.S. dollar during these times.
Barrick was trading at $51.88, rising by $1.55, or 3.08 percent as of 2:35 PM EST. Goldcorp was at $45.78, gaining $0.70, or 1.55 percent. Newmont was at $58.84, up by $0.75, or 1.29 percent.
Interestingly, trading volume for all three didn't take off, as they are all slightly below their 3-month average.
Gold Prices Today Soar on EU Sovereign Debt Disaster
Black Friday temporarily captured the attention and imagination of traders and investors, but that is already past us and the potential contagion and ongoing disaster related to the EU sovereign debt crisis has them running to gold again for safety reasons.
Gold for February delivery at the Comex division of the New York Mercantile Exchange rose by $17.40 to $1,384.90 an ounce. Spot gold was at 1,384.10, rising by $16.80 as of 2:19 PM EST.
As has happened several times in the recent past, gold ignored the temporary rising value of the U.S. dollar, for imperceivable reasons, has also attracted those seeking safety.
At those times the two ignore the usual inverse relationship and rise together. That could continue to happen in the current economic climate for a short period of time.
Much of that will be determined by the perceived fate and value of the euro against the dollar as the narrative unfolds in Europe.
The problem seems to be the EU and news outlets are not reporting the true depth of the problem, which appears to be far worse than is being let on.
Greece, for example, recently stated their deficits are probably worst than last reported, which implies either outright dishonesty or ineptness; both of which are dangerous to the region, although at lower levels than the obvious repercussions if Spain were to require a bailout.
This seems to be the primary driver of gold at this time, and as long as the euro remains under pressure and the U.S. dollar moves up against it, gold and the dollar will probably rise together.
That will eventually change, but until it does, gold will most likely move up slower than it otherwise would have in light of other economic factors like the quantitative easing of the Federal Reserve.
Gold for February delivery at the Comex division of the New York Mercantile Exchange rose by $17.40 to $1,384.90 an ounce. Spot gold was at 1,384.10, rising by $16.80 as of 2:19 PM EST.
As has happened several times in the recent past, gold ignored the temporary rising value of the U.S. dollar, for imperceivable reasons, has also attracted those seeking safety.
At those times the two ignore the usual inverse relationship and rise together. That could continue to happen in the current economic climate for a short period of time.
Much of that will be determined by the perceived fate and value of the euro against the dollar as the narrative unfolds in Europe.
The problem seems to be the EU and news outlets are not reporting the true depth of the problem, which appears to be far worse than is being let on.
Greece, for example, recently stated their deficits are probably worst than last reported, which implies either outright dishonesty or ineptness; both of which are dangerous to the region, although at lower levels than the obvious repercussions if Spain were to require a bailout.
This seems to be the primary driver of gold at this time, and as long as the euro remains under pressure and the U.S. dollar moves up against it, gold and the dollar will probably rise together.
That will eventually change, but until it does, gold will most likely move up slower than it otherwise would have in light of other economic factors like the quantitative easing of the Federal Reserve.
Scientific Games (NASDAQ:SGMS) Shares Soar on CEO Change
News that the former chief executive officer of Scientific Games Corporation (NASDAQ:SGMS) A. Lorne Weil, who is the chairman of the company, will resume the role of CEO has resulted in the share price of the company taking off, as his prior performance has generated enormous confidence in the future of the company.
Weil takes over for Michael R. Chambrello, the company's current President and Chief Executive Officer, who will depart to become CEO of the Asia-Pacific Region.
From 1992 to 2008, Weil took the company from generating revenue of $50 million to over $1 billion, the reason for renewed optimism.
Shares for Scientific Games were trading at $7.93, gaining $1.21, or 18.01 percent as of 2:02 PM EST.
Weil takes over for Michael R. Chambrello, the company's current President and Chief Executive Officer, who will depart to become CEO of the Asia-Pacific Region.
From 1992 to 2008, Weil took the company from generating revenue of $50 million to over $1 billion, the reason for renewed optimism.
Shares for Scientific Games were trading at $7.93, gaining $1.21, or 18.01 percent as of 2:02 PM EST.
GrafTech (NYSE:GTI) Shares Up on Acquisitions of Seadrift, C/G Electrodes
Shares of GrafTech International Ltd. (NYSE:GTI) are making a nice move today on the news they've completed their acquisitions of Seadrift Coke L.P. and C/G Electrodes.
Seadrift is the second largest producer of petroleum-based needle coke in the world. CG Electrode is a producer of graphite electrodes.
Trading volume on the day is closing in on almost three times the daily 3-month average.
GrafTech was trading at $19.47, gaining $0.84, or 4.51 percent as of 1:42 PM EST. They're near the top end of the 52- week range of $11.68 - $19.61.
Seadrift is the second largest producer of petroleum-based needle coke in the world. CG Electrode is a producer of graphite electrodes.
Trading volume on the day is closing in on almost three times the daily 3-month average.
GrafTech was trading at $19.47, gaining $0.84, or 4.51 percent as of 1:42 PM EST. They're near the top end of the 52- week range of $11.68 - $19.61.
Goldman (NYSE:GS) Launches Coverage on Diana Shipping (NYSE:DSX), Shares Soar
Shares of Diana Shipping (NYSE:DSX) have soared today as Goldman Sachs (NYSE:GS) announced they've initiated coverage on them with a "Buy" rating.
Volume is already up over 3 times the normal 3-month average.
Diana primarily ships dry bulk cargoes, with a large part of that being commodities like grain, coal, and iron ore.
They were trading at $13.37, gaining $0.74, or 5.86 percent as of 1:47 PM EST. Goldman placed a price target of $17 on them.
Volume is already up over 3 times the normal 3-month average.
Diana primarily ships dry bulk cargoes, with a large part of that being commodities like grain, coal, and iron ore.
They were trading at $13.37, gaining $0.74, or 5.86 percent as of 1:47 PM EST. Goldman placed a price target of $17 on them.
Oppenheimer Says Citigroup (NYSE:C) Worth Over $5 A Share
Citigroup (NYSE:C) has pushed up slightly today as Oppenheimer analyst Chris Kotowski said the company was worth more than $5 a share.
In a note to clients, Kotowski said, "There is good reason to believe that Citi Holdings can be wound down without undue further damage to shareholders and that the remaining businesses in Citicorp are worth over $5 per share."
Concerning the overall businesses of the bank, Kotowski added, "While we think Citi's U.S. consumer franchise still faces some challenges, we think it looks very much like Capital One, and should be valued accordingly and that Citi's Asian and Latin American businesses are growing nicely and should be valued accordingly as well."
Oppenheimer maintains their "Outperform" rating on the stock, which was trading at $4.22, gaining $0.07,or 1.81 percent as of 1:43 PM EST. They have a price target of $5.20 on them.
In a note to clients, Kotowski said, "There is good reason to believe that Citi Holdings can be wound down without undue further damage to shareholders and that the remaining businesses in Citicorp are worth over $5 per share."
Concerning the overall businesses of the bank, Kotowski added, "While we think Citi's U.S. consumer franchise still faces some challenges, we think it looks very much like Capital One, and should be valued accordingly and that Citi's Asian and Latin American businesses are growing nicely and should be valued accordingly as well."
Oppenheimer maintains their "Outperform" rating on the stock, which was trading at $4.22, gaining $0.07,or 1.81 percent as of 1:43 PM EST. They have a price target of $5.20 on them.
Bank Of America (NYSE:BAC) to be Exposed by WikiLeaks?
It's hard to tell at this time whether or not the assertion by Julian Assange that he has information which could "take down" a major bank (now assumed to be Bank of America (NYSE:BAC) is true or not, but it definitely has garnered interest and generated some hand-wringing at the same time.
The reason Bank of America is thought to be the target of information being released is from an interview in 2009 by Computer World with Assange, where he said this:
"At the moment, for example, we are sitting on 5GB from Bank of America, one of the executive's hard drives. Now how do we present that? It's a difficult problem. We could just dump it all into one giant Zip file, but we know for a fact that has limited impact. To have impact, it needs to be easy for people to dive in and search it and get something out of it."
The question after sitting on the information so long is whether or not anything new and startling will be revealed, and if in fact Assange has even come close to going through most of it, as it's a huge amount of data to sift through, and would take a team of people to do it.
Even though Bank of America was cited by Assange, it hasn't been confirmed yet whether or not they're actually the bank or banks he had in mind when talking about one or two of them being taken down.
He did say in the interview that it won't have a significant impact on the overall banking industry, but will definitely have an impact on a small number of them, as mentioned above.
The reason Bank of America is thought to be the target of information being released is from an interview in 2009 by Computer World with Assange, where he said this:
"At the moment, for example, we are sitting on 5GB from Bank of America, one of the executive's hard drives. Now how do we present that? It's a difficult problem. We could just dump it all into one giant Zip file, but we know for a fact that has limited impact. To have impact, it needs to be easy for people to dive in and search it and get something out of it."
The question after sitting on the information so long is whether or not anything new and startling will be revealed, and if in fact Assange has even come close to going through most of it, as it's a huge amount of data to sift through, and would take a team of people to do it.
Even though Bank of America was cited by Assange, it hasn't been confirmed yet whether or not they're actually the bank or banks he had in mind when talking about one or two of them being taken down.
He did say in the interview that it won't have a significant impact on the overall banking industry, but will definitely have an impact on a small number of them, as mentioned above.
Alcoa (NYSE:AA), Ma'aden Secure $1.9 Billion for JV
Loan deals worth $1.9 billion have been signed by Alcoa (NYSE:AA) and Ma'aden in order to further their work on the giant aluminum project in Saudi Arabia.
This is in addition to the already-secured $2.6 billion in financing from the Saudi Public Investment Fund and the Saudi Industrial Development Fund for the first phase of development.
The two companies have entered into a contract to develop a $10.8 billion industrial complex to sell to the region and international markets.
A key part of the project is a huge bauxite mine in Qassim, which has the capacity to produce up to 4 million metric tons.
Financing for the second phase of the project is expected to start up soon.
This is in addition to the already-secured $2.6 billion in financing from the Saudi Public Investment Fund and the Saudi Industrial Development Fund for the first phase of development.
The two companies have entered into a contract to develop a $10.8 billion industrial complex to sell to the region and international markets.
A key part of the project is a huge bauxite mine in Qassim, which has the capacity to produce up to 4 million metric tons.
Financing for the second phase of the project is expected to start up soon.
BP's (NYSE:BP) Oil Production in Azerbaijan to Reach 850,000 BPD in 2011
Oil production in Azerbaijan by BP (NYSE:BP) is expected to reach 850,000 barrels a day in 2011, similar to levels of production in 2010, according to BP-Azerbaijan president Rashid Jevanshir.
Jevanshir said, "According to preliminary estimates, production at Azeri, Chirag and Guneshli next year will be 850,000 bpd, almost the same level as in 2010."
Chirag, Azeri and Guneshli are oilfields in the Caspian Sea.
For full year 2010, oil production in the country should reach 42.1 million tons, up from the 40.3 million tons in 2009.
Production in the first nine months of 2010 has increased to $32.2 million tons, up from 31.4 million in the same period last year.
Jevanshir said, "According to preliminary estimates, production at Azeri, Chirag and Guneshli next year will be 850,000 bpd, almost the same level as in 2010."
Chirag, Azeri and Guneshli are oilfields in the Caspian Sea.
For full year 2010, oil production in the country should reach 42.1 million tons, up from the 40.3 million tons in 2009.
Production in the first nine months of 2010 has increased to $32.2 million tons, up from 31.4 million in the same period last year.
Las Vegas Sands (NYSE:LVS), Wynn Resorts (Nasdaq:WYNN), MGM Resorts (NYSE:MGM) Sales Estimates Raised
Citing measurable improvements in the VIP segment, along with gross gaming sales in Macau in 2011 estimated to rise, UBS (NYSE:UBS) raised their sales estimates on Las Vegas Sands (NYSE:LVS), Wynn Resorts (Nasdaq:WYNN) and MGM Resorts (NYSE:MGM).
For Las Vegas Sands, UBS increased its sales estimate for full year 2011 in Macau from $4.9 billion to $5.2 billion. UBS also maintains their "Neutral" rating on Las Vegas Sands, which was trading at $50.31, falling $0.19, or 0.38 percent as of 12:25 PM EST. UBS has a price target on them of $55, increasing it from $52.
For MGM, the sales estimate for Macau sales was increased from $1.66 billion to $1.86 billion for full year 2010, for full year 2011 from $1.84 billion to $3 billion, and for full year 2010 from $2 billion to $3.3 billion.
MGM was trading at $12.23, down slightly by $0.03, or 0.24 percent. UBS increased their price target on them from $12 to $13.
Wynn had their full year sales estimate for 2011 raised by UBS from $3.7 billion to $3.8 billion and for 2012 from $3.9 billion to $4.1 billion.
They maintain a "Buy" rating on Wynn, which was trading at $101.72, down $0.51, or 0.50 percent. UBS has a price target of $133 on them, raising it from $129.
For Las Vegas Sands, UBS increased its sales estimate for full year 2011 in Macau from $4.9 billion to $5.2 billion. UBS also maintains their "Neutral" rating on Las Vegas Sands, which was trading at $50.31, falling $0.19, or 0.38 percent as of 12:25 PM EST. UBS has a price target on them of $55, increasing it from $52.
For MGM, the sales estimate for Macau sales was increased from $1.66 billion to $1.86 billion for full year 2010, for full year 2011 from $1.84 billion to $3 billion, and for full year 2010 from $2 billion to $3.3 billion.
MGM was trading at $12.23, down slightly by $0.03, or 0.24 percent. UBS increased their price target on them from $12 to $13.
Wynn had their full year sales estimate for 2011 raised by UBS from $3.7 billion to $3.8 billion and for 2012 from $3.9 billion to $4.1 billion.
They maintain a "Buy" rating on Wynn, which was trading at $101.72, down $0.51, or 0.50 percent. UBS has a price target of $133 on them, raising it from $129.
Rubicon Minerals (NYSE:RBY) PT Raised on Phoenix Gold Deposit
Rubicon Minerals (NYSE:RBY) has justifiably received a lot of press lately on the news of their high-grade resource estimates in connection to their Phoenix Gold Project, which the 100 percent own.
TD Newcrest said, "The initial estimate outlined a significant, high-grade deposit, in our view, that markedly exceeded our modeled resource inventory of 3.0 mm ounces (6.4 mm tons grading 16 g/t)."
They maintain a "Speculative Buy" rating on the company.
Rubicon was trading at $5.83, down $0.21, or 3.48 percent as of 12:13 PM EST. TD has a price target of C$10.00 on them, raising it from C$6.00.
Trading volume is almost four times the usual daily 3-month average.
TD Newcrest said, "The initial estimate outlined a significant, high-grade deposit, in our view, that markedly exceeded our modeled resource inventory of 3.0 mm ounces (6.4 mm tons grading 16 g/t)."
They maintain a "Speculative Buy" rating on the company.
Rubicon was trading at $5.83, down $0.21, or 3.48 percent as of 12:13 PM EST. TD has a price target of C$10.00 on them, raising it from C$6.00.
Trading volume is almost four times the usual daily 3-month average.
Applied Materials (NASDAQ:AMAT) Should Grow Share at Samsung after Settlement
The announcement by Applied Materials (NASDAQ:AMAT) that they have reached a settlement with Samsung should result in Applied gaining share with them going forward.
Needham & Company said, "AMAT announced a settlement with Samsung related to the case involving AMAT's employees allegedly passing Samsung's (N/R) process technologies to Hynix (N/R). We believe this agreement removes a major overhang on AMAT's business with Samsung, the largest customer in the industry. As a result, we believe AMAT will gain share at Samsung in the coming year. Additionally, at Semicon Japan, AMAT announced a new platform for Conductor etch, which appears to be gaining some momentum. With 15 new Silicon products announced over the last 15 month, we view AMAT's renewed focus on the Silicon business as a positive for the story."
Applied Materials was trading at $12.36, down by $0.16, or 1.24 percent as of 11:58 AM EST. Needham has a price target of $14 on them.
Needham & Company said, "AMAT announced a settlement with Samsung related to the case involving AMAT's employees allegedly passing Samsung's (N/R) process technologies to Hynix (N/R). We believe this agreement removes a major overhang on AMAT's business with Samsung, the largest customer in the industry. As a result, we believe AMAT will gain share at Samsung in the coming year. Additionally, at Semicon Japan, AMAT announced a new platform for Conductor etch, which appears to be gaining some momentum. With 15 new Silicon products announced over the last 15 month, we view AMAT's renewed focus on the Silicon business as a positive for the story."
Applied Materials was trading at $12.36, down by $0.16, or 1.24 percent as of 11:58 AM EST. Needham has a price target of $14 on them.
BP (NYSE:BP, Husky (TSE:HSE) Starting Oil Sands Work
BP Plc (NYSE:BP) and Husky Energy Inc. (TSE:HSE) are ready to launch the first phase of the Sunrise Energy Project in the oil sands in the province of Alberta, Canada.
Just under $2 billion will be spent on contracts for the job, according to Husky.
Overall the first phase will cost about $2.5 billion, which BP has committed to pay for, significantly under the early expenditure estimates of C$4 billion.
Husky is much more conservative in their daily production estimates than BP, saying they see production reaching about 60,000 barrels a day, while BP has a much higher estimate of as high as 200,000 barrels of oil a day in production. Those figures are based on it coming about sometime in 2014.
BP says there are about 3 billion barrels of oil within the Sunrise project.
Just under $2 billion will be spent on contracts for the job, according to Husky.
Overall the first phase will cost about $2.5 billion, which BP has committed to pay for, significantly under the early expenditure estimates of C$4 billion.
Husky is much more conservative in their daily production estimates than BP, saying they see production reaching about 60,000 barrels a day, while BP has a much higher estimate of as high as 200,000 barrels of oil a day in production. Those figures are based on it coming about sometime in 2014.
BP says there are about 3 billion barrels of oil within the Sunrise project.
Yamana (NYSE:AUY) in New Discoveries at Mercedes, Pilar Mines
Two new discoveries at its Mercedes project in Mexico and its Pilar project in Brazil could result in higher production than originally estimated by Yamana (NYSE:AUY).
Yamana said they found a significant amount of new resources at Mercedes silver and gold project, which is scheduled to begin production in 2012.
At their Pilar project, the new discoveries are expected to extend the life of the mine, which should have production begin in 2013.
Yamana says their exploration strategy in 2011 will be very aggressive.
Investors have tired of waiting for the company, which has done nothing as far as share price goes for over four years.
Yamana is trying to do something to generate interest again, and new finds resulting in higher production are a good point to begin with.
About $78.5 million has been committed to exploration by Yamana in 2010.
Yamana said they found a significant amount of new resources at Mercedes silver and gold project, which is scheduled to begin production in 2012.
At their Pilar project, the new discoveries are expected to extend the life of the mine, which should have production begin in 2013.
Yamana says their exploration strategy in 2011 will be very aggressive.
Investors have tired of waiting for the company, which has done nothing as far as share price goes for over four years.
Yamana is trying to do something to generate interest again, and new finds resulting in higher production are a good point to begin with.
About $78.5 million has been committed to exploration by Yamana in 2010.
The Finish Line (Nasdaq:FINL), Foot Locker (NYSE:FL), Dick's Sporting Goods (NYSE:DKS), True Religion (Nasdaq:TRLG), VF Corp (NYSE:VFC) Performing As Expected
FBR Capital said after visiting the physical locations of retailers like The Finish Line (Nasdaq:FINL), Foot Locker (NYSE:FL), Dick's Sporting Goods (NYSE:DKS), True Religion (Nasdaq:TRLG) and VF Corp (NYSE:VFC), they see the stores performing as they thought they would during Black Friday, with The Finish Line, Foot Locker and Dick's Sporting Goods enjoying significant traffic.
"On Black Friday, we visited stores in the Washington, D.C. metro area, including retail locations of The Finish Line (Nasdaq: FINL)(Outperform), Foot Locker (Outperform), Dick's Sporting Goods (Outperform), True Religion (Outperform), and VF Corp's (Market Perform) The North Face...We did not expect Black Friday traffic at any of our targeted stores to be "newsworthy" given that these stores are not doorbuster destinations offering loss-leading items or major discounts, particularly in light of inventory positions supportive of full-price selling. We also believe that an ongoing shift to online holiday sales and discounting earlier in the shopping season are chipping away at Black Friday's importance to overall brick and mortar apparel and footwear holiday sales.
"Relative to overall mall traffic, traffic at Finish Line and Foot Locker stores was strong. Traffic at Dick's Sporting Goods was also robust. At the Georgetown location of The North Face and the Georgetown and Pentagon City locations of True Religion, in-store traffic was relatively light. Lighter traffic at The North Face and True Religion did not surprise or concern us, given that these are not traditional Black Friday destinations as a result of their premium price points and lack of discounting.
"Overall, what we saw on Black Friday did not sway our thesis on any of our covered companies, but reinforced our positive view of athletic footwear retailers, given what we expect to be continued top-line momentum on solid margins. We think limited and targeted discounting at Finish Line and Foot Locker bode well for gross margins, while the strong product cycle in athletic footwear should continue to support the top line, even in the face of difficult year-over-year comparisons."
The Finish Line closed Monday at $17.57, dropping $0.18, or 1.01 percent. Footlocker ended the session at $19.05, gaining $0.40, or 2.14 percent. Dicks Sporting Goods was at $34.38. falling $0.35, or 1.01 percent. True Religion Apparel closed up at $22.80, increasing by $0.13, or 0.57 percent. V.F. Corporation closed at $83.33, down by $0.49, or 0.58 percent.
"On Black Friday, we visited stores in the Washington, D.C. metro area, including retail locations of The Finish Line (Nasdaq: FINL)(Outperform), Foot Locker (Outperform), Dick's Sporting Goods (Outperform), True Religion (Outperform), and VF Corp's (Market Perform) The North Face...We did not expect Black Friday traffic at any of our targeted stores to be "newsworthy" given that these stores are not doorbuster destinations offering loss-leading items or major discounts, particularly in light of inventory positions supportive of full-price selling. We also believe that an ongoing shift to online holiday sales and discounting earlier in the shopping season are chipping away at Black Friday's importance to overall brick and mortar apparel and footwear holiday sales.
"Relative to overall mall traffic, traffic at Finish Line and Foot Locker stores was strong. Traffic at Dick's Sporting Goods was also robust. At the Georgetown location of The North Face and the Georgetown and Pentagon City locations of True Religion, in-store traffic was relatively light. Lighter traffic at The North Face and True Religion did not surprise or concern us, given that these are not traditional Black Friday destinations as a result of their premium price points and lack of discounting.
"Overall, what we saw on Black Friday did not sway our thesis on any of our covered companies, but reinforced our positive view of athletic footwear retailers, given what we expect to be continued top-line momentum on solid margins. We think limited and targeted discounting at Finish Line and Foot Locker bode well for gross margins, while the strong product cycle in athletic footwear should continue to support the top line, even in the face of difficult year-over-year comparisons."
The Finish Line closed Monday at $17.57, dropping $0.18, or 1.01 percent. Footlocker ended the session at $19.05, gaining $0.40, or 2.14 percent. Dicks Sporting Goods was at $34.38. falling $0.35, or 1.01 percent. True Religion Apparel closed up at $22.80, increasing by $0.13, or 0.57 percent. V.F. Corporation closed at $83.33, down by $0.49, or 0.58 percent.
BP (NYSE:BP) Must Wait for Devon (NYSE:DVN) Oil Block Decision from Brazil
The state oil director of Brazil, ANP, told BP (NYSE:BP) they'll have to wait until 2011 before they decide on whether or not to allow them to go ahead with a proposed acquisition of offshore oil blocks from Devon Energy (NYSE:DVN).
ANP said they want to get more clarity on the plans of BP for the oil blocks before they make the decision.
Also of concern was a requirement for more information on the Deepwater Horizon oil rig explosion and failure which led to the disaster in the Gulf of Mexico.
Haroldo Lima, director general of the ANP, is interested in the long-term commitment of BP, and whether that's part of their strategy. BP Chief Executive Officer Robert Dudley has said they're interested in a long-term relationship with Brazil.
ANP said they want to get more clarity on the plans of BP for the oil blocks before they make the decision.
Also of concern was a requirement for more information on the Deepwater Horizon oil rig explosion and failure which led to the disaster in the Gulf of Mexico.
Haroldo Lima, director general of the ANP, is interested in the long-term commitment of BP, and whether that's part of their strategy. BP Chief Executive Officer Robert Dudley has said they're interested in a long-term relationship with Brazil.
Starbucks (Nasdaq:SBUX) Shares Should Respond to Earnings Focus
Argus likes the strategy Starbucks (Nasdaq:SBUX) is implementing and sees the share price of the company growing as earnings increase.
They see same-store sales continuing to grow at they "restore earnings by slowing unit expansion, managing expenses, and implementing programs to increase traffic."
Argus, which maintains a "Buy" rating on Starbucks, raised their EPS estimates for full year 2011 from $1.46 to $1.50 and for full year 2012 from $1.75 to $1.80. That's above the Street consensus.
Starbucks closed Monday at $30.79, dropping $0.35, or 1.12 percent. Argus raised their price target on them from $38 a share to $39.
They see same-store sales continuing to grow at they "restore earnings by slowing unit expansion, managing expenses, and implementing programs to increase traffic."
Argus, which maintains a "Buy" rating on Starbucks, raised their EPS estimates for full year 2011 from $1.46 to $1.50 and for full year 2012 from $1.75 to $1.80. That's above the Street consensus.
Starbucks closed Monday at $30.79, dropping $0.35, or 1.12 percent. Argus raised their price target on them from $38 a share to $39.
Intel (Nasdaq:INTC), AMD (NYSE:AMD) Get Bullish Sentiment from Deutsche Bank (NYSE:DB)
Intel (Nasdaq:INTC) and AMD (NYSE:AMD) received positive comments from Deutsche Bank (NYSE:DB), although the financial institution gives Intel higher marks based on gain in graphics share and better exposure to Enterprise.
Deutsche said, "Looking back at 3Q10, despite sub-seasonal growth, x86 MPU revs hit a all-time record of $9.2bn, inventory levels remained low on a $ basis and ASPs pressure remained benign. After weathering this storm in solid fashion, we believe 4Q is tracking in-line with our ests, and now expect 2011 to be above our prior forecasts. Consequently, we are raising our x86 MPU rev forecast to +6% y/y (+1% prior) and increasing our ests for INTC & AMD. We continue to prefer Buy rated Intel given better Enterprise exposure and share gains in graphics."
Revenue estimates were raised by Deutsche on Intel from $44 billion to $46.5 billion for 2011 and EPS estimates were raised for 2011 from $1.85 to $2.00.
AMD revenue estimates for 2011 were raised from $6.31 billion to $6.62 billion and EPS estimates for 2011 from $0.17 to $0.40.
Intel closed Monday at $21.33, dropping slightly to $0.01, or 0.05 percent. The price target on them was raised from $25 to $25. A "Buy" rating is maintained on the chip maker.
AMD closed at $7.38, losing $0.17, or 2.25 percent. Deutsche has a price target of $8 on them, while maintaining a "Hold" rating on them.
Deutsche said, "Looking back at 3Q10, despite sub-seasonal growth, x86 MPU revs hit a all-time record of $9.2bn, inventory levels remained low on a $ basis and ASPs pressure remained benign. After weathering this storm in solid fashion, we believe 4Q is tracking in-line with our ests, and now expect 2011 to be above our prior forecasts. Consequently, we are raising our x86 MPU rev forecast to +6% y/y (+1% prior) and increasing our ests for INTC & AMD. We continue to prefer Buy rated Intel given better Enterprise exposure and share gains in graphics."
Revenue estimates were raised by Deutsche on Intel from $44 billion to $46.5 billion for 2011 and EPS estimates were raised for 2011 from $1.85 to $2.00.
AMD revenue estimates for 2011 were raised from $6.31 billion to $6.62 billion and EPS estimates for 2011 from $0.17 to $0.40.
Intel closed Monday at $21.33, dropping slightly to $0.01, or 0.05 percent. The price target on them was raised from $25 to $25. A "Buy" rating is maintained on the chip maker.
AMD closed at $7.38, losing $0.17, or 2.25 percent. Deutsche has a price target of $8 on them, while maintaining a "Hold" rating on them.
Shanda's (NASDAQ:SNDA) Acquisition of Eyedentity Positive for Top and Bottom Line
Shanda Interactive's (NASDAQ:SNDA) acquisition of Eyedentity Games should help the company overcome some of the negative and generate growth. It's yet to be determined whether that growth will be enough to meet the expectations of the Street.
Auriga noted several positive things in the game market:
"1) Dragon Nest continues to perform well, 2) Mir II has been stabilizing, and 3) the acquisition of Eyedentity Games, Dragon Nest's developer, can be positive to both top and bottom line, we believe it is a challenge for the positives to offset the negative and generate growth expected by the Street."
Shanda Interactive (NASDAQ:SNDA) has a "Buy" rating maintained on them by Auriga. They closed Monday at $40 even, gaining $0.16, or 0.40 percent. They have a price target of $51 placed on them.
Auriga noted several positive things in the game market:
"1) Dragon Nest continues to perform well, 2) Mir II has been stabilizing, and 3) the acquisition of Eyedentity Games, Dragon Nest's developer, can be positive to both top and bottom line, we believe it is a challenge for the positives to offset the negative and generate growth expected by the Street."
Shanda Interactive (NASDAQ:SNDA) has a "Buy" rating maintained on them by Auriga. They closed Monday at $40 even, gaining $0.16, or 0.40 percent. They have a price target of $51 placed on them.
Human Genome Sciences (Nasdaq:HGSI) High on Baird's List
Baird analysts remain extremely bullish on Human Genome Sciences, Inc. (Nasdaq:HGSI), saying they would be "aggressive buyers" of the company.
They maintain their "Outperform" rating and price target on the company.
Baird analyst Christopher Raymond said, "While a three-month administrative delay beyond Benlysta's December 9 PDUFA is expected, the positive FDA AdCom vote did significantly de-risk the drug, in our view. Given this, and given the market misperceptions addressed herein, we would be aggressive buyers."
Citing a short window to PDUFA, their EPS estimates for the first quarter of 2011, full year 2011, and full year 2012 were lowered to $1.6 million, $161.4 million, and $793.8 million.
Human Genome Sciences closed Monday at $24.79, losing $0.11, or 0.44 percent. Baird has a price target of $32 on the company.
They maintain their "Outperform" rating and price target on the company.
Baird analyst Christopher Raymond said, "While a three-month administrative delay beyond Benlysta's December 9 PDUFA is expected, the positive FDA AdCom vote did significantly de-risk the drug, in our view. Given this, and given the market misperceptions addressed herein, we would be aggressive buyers."
Citing a short window to PDUFA, their EPS estimates for the first quarter of 2011, full year 2011, and full year 2012 were lowered to $1.6 million, $161.4 million, and $793.8 million.
Human Genome Sciences closed Monday at $24.79, losing $0.11, or 0.44 percent. Baird has a price target of $32 on the company.
Morgan Stanley (NYSE:MS) Removes Dollar General (NYSE:DG) from 'Best Ideas' List
Dollar General (NYSE:DG) was able to fight through their removal from the "Best Ideas" list of Morgan Stanley (NYSE:MS) Monday, as well as being downgraded by Avondale Partners.
Avondale said, "Our downgrade of Dollar General is based solely on 1) valuation and 2) the share price recently surpassing our $33 price target. We believe shares are near fully valued at the Friday Nov. 26 closing price of $32.74."
Avondale downgraded them from "Market Outperform" to "Market Perform."
Morgan Stanley lowered their EPS estimate on the retailer, now expecting full year EPS for 2010 of $1.58 and for full year 2011 EPS of $2.02.
Dollar General closed Monday at $32.78, gaining slightly at $0.04, or 0.12 percent. Avondale has a price target of $33 on them. Morgan Stanley's price target on them is $35.
Avondale said, "Our downgrade of Dollar General is based solely on 1) valuation and 2) the share price recently surpassing our $33 price target. We believe shares are near fully valued at the Friday Nov. 26 closing price of $32.74."
Avondale downgraded them from "Market Outperform" to "Market Perform."
Morgan Stanley lowered their EPS estimate on the retailer, now expecting full year EPS for 2010 of $1.58 and for full year 2011 EPS of $2.02.
Dollar General closed Monday at $32.78, gaining slightly at $0.04, or 0.12 percent. Avondale has a price target of $33 on them. Morgan Stanley's price target on them is $35.
Zions Bancorp (NASDAQ:ZION) Franchise Value Under Pressure
Miller Tabak has lowered their price target and earnings estimate for Zions Bancorp (NASDAQ:ZION), while maintaining a "Sell" rating on the financial institution.
Concerns are their franchise could drop in value because of moves that are diluting the shares of the company.
Miller Tabak said, "In recent quarters, ZION has successfully managed to convert a considerable amount of subordinated debt into new preferred stock, while also selling new common and preferred stock to the public. This had resulted in some dilution to common shareholders, and we estimate that ZION is not finished de-leveraging its capital structure."
Zions closed on Monday at $19.25, falling $0.25, or 1.28 percent. Miller has a price target of $16.95 on them.
Concerns are their franchise could drop in value because of moves that are diluting the shares of the company.
Miller Tabak said, "In recent quarters, ZION has successfully managed to convert a considerable amount of subordinated debt into new preferred stock, while also selling new common and preferred stock to the public. This had resulted in some dilution to common shareholders, and we estimate that ZION is not finished de-leveraging its capital structure."
Zions closed on Monday at $19.25, falling $0.25, or 1.28 percent. Miller has a price target of $16.95 on them.
Cooper (NYSE:CBE), WESCO (NYSE:WCC), SPX (NYSE:SPW), ABB (NYSE:ABB) Should Benefit from Short Lead Times
With capital expenditures for electric utilities expected to rise in the near term, suppliers like Cooper (NYSE:CBE), WESCO (NYSE:WCC), SPX (NYSE:SPW) and ABB (NYSE:ABB), which have product portfolios with relatively short lead times stand to benefit in the near term.
Of those, ABB have the longest lead time, and may have to wait until the second half of 2011 before they benefit from increased capex.
FBR said, "After declining for the last several quarters, electric utility capex appears to be turning around and our analysis of capex plans of 46 U.S. Electric Utilities suggests potential for a solid pickup in spending. This pickup would be driven by (1) a potential catch-up in spending as electricity demand recovers following two years of declines; (2) new EPA regulations that should drive investment in environmental projects; (3) longer-term need to upgrade the aging T&D grid and ongoing investments in renewables, which necessitates buildout of the transmission infrastructure; and (4) generally strong balance sheets and easier credit availability where CDS spreads are considerably tighter from levels seen in 2009. More near term, we see a pickup related to spending push-out from 2010, during which year-to-date utility spending has tracked meaningfully below plan primarily due to unseasonably warm weather, and possible postponement of expansion at low utilization plants. Our analysis is supported by discussions with several U.S. shareholder-owned utilities at the recent Edison Electric Institute conference, where many companies commented on outlook for solid spending growth driven by environmental, reliability, and transmission spending. This improving capex outlook has positive implications for electrical equipment suppliers, in our view. Specifically, we see upside for suppliers with product portfolios that have relatively short lead times, who could benefit from the near-term pickup in spending, including Outperform-rated Cooper. WESCO should benefit from any spending pickup on the distribution infrastructure. Market Perform-rated SPX, and non-covered ABB also stand to benefit, but their longer lead-time products suggest a 2H11 impact. With regard to implications for Electric Utilities under coverage, high levels of capital expenditures remains consistent with robust rate base growth trajectories for the regulated utilities for the foreseeable future."
Cooper closed Monday at $54.32, down slightly by $0.04, or 0.07 percent. Wesco ended the session at $47.89, falling $0.71, or 1.46 percent. SPX closed at $65.96, down $0.31, or 0.47 percent. ABB ended almost level at $19.57, losing $0.01, or 0.05 percent.
Of those, ABB have the longest lead time, and may have to wait until the second half of 2011 before they benefit from increased capex.
FBR said, "After declining for the last several quarters, electric utility capex appears to be turning around and our analysis of capex plans of 46 U.S. Electric Utilities suggests potential for a solid pickup in spending. This pickup would be driven by (1) a potential catch-up in spending as electricity demand recovers following two years of declines; (2) new EPA regulations that should drive investment in environmental projects; (3) longer-term need to upgrade the aging T&D grid and ongoing investments in renewables, which necessitates buildout of the transmission infrastructure; and (4) generally strong balance sheets and easier credit availability where CDS spreads are considerably tighter from levels seen in 2009. More near term, we see a pickup related to spending push-out from 2010, during which year-to-date utility spending has tracked meaningfully below plan primarily due to unseasonably warm weather, and possible postponement of expansion at low utilization plants. Our analysis is supported by discussions with several U.S. shareholder-owned utilities at the recent Edison Electric Institute conference, where many companies commented on outlook for solid spending growth driven by environmental, reliability, and transmission spending. This improving capex outlook has positive implications for electrical equipment suppliers, in our view. Specifically, we see upside for suppliers with product portfolios that have relatively short lead times, who could benefit from the near-term pickup in spending, including Outperform-rated Cooper. WESCO should benefit from any spending pickup on the distribution infrastructure. Market Perform-rated SPX, and non-covered ABB also stand to benefit, but their longer lead-time products suggest a 2H11 impact. With regard to implications for Electric Utilities under coverage, high levels of capital expenditures remains consistent with robust rate base growth trajectories for the regulated utilities for the foreseeable future."
Cooper closed Monday at $54.32, down slightly by $0.04, or 0.07 percent. Wesco ended the session at $47.89, falling $0.71, or 1.46 percent. SPX closed at $65.96, down $0.31, or 0.47 percent. ABB ended almost level at $19.57, losing $0.01, or 0.05 percent.
Fluor (NYSE:FLR), Foster Wheeler (Nasdaq:FWLT), McDermott (NYSE:MDR), KBR (NYSE:KBR) EPS Estimates Raised
Saying energy infrastructure will lead the Engineering & Construction sector in 2011, Gleacher & Co. said they're raising their earnings estimates on Fluor (NYSE:FLR), Foster Wheeler (Nasdaq:FWLT), McDermott (NYSE:MDR) and KBR (NYSE:KBR).
Gleacher stated, "In conjunction with rolling out our 2012 EPS estimates, we are increasing our price targets on Fluor to ($67 from $60), Foster Wheeler ($35 from $30), McDermott ($23 from $21) and KBR, Inc. ($33 from $30). We believe the trough in industry backlog is behind us and market conditions are favorable for energy infrastructure equity appreciation.
"In general, we maintain our view that international energy/mining infrastructure companies will drive better investor returns than domestic Federal and energy exposed companies. Gulf Island and B&W are exceptions to our thesis as we believe pure-play Gulf of Mexico fabrication and nuclear will outperform other US
end-markets."
Gleacher has a "Buy" rating on the the stocks mentioned above.
Flour closed Monday at $57.98, gaining $0.39, or 0.68 percent. Foster Wheeler ended the session at $29.11, rising by $0.33, or 1.15 percent. McDermott International closed the day at $18.17, dropping $0.22, or 1.20 percent. KBR ended at $27.68, losing $0.06, or 0.22 percent.
Gleacher stated, "In conjunction with rolling out our 2012 EPS estimates, we are increasing our price targets on Fluor to ($67 from $60), Foster Wheeler ($35 from $30), McDermott ($23 from $21) and KBR, Inc. ($33 from $30). We believe the trough in industry backlog is behind us and market conditions are favorable for energy infrastructure equity appreciation.
"In general, we maintain our view that international energy/mining infrastructure companies will drive better investor returns than domestic Federal and energy exposed companies. Gulf Island and B&W are exceptions to our thesis as we believe pure-play Gulf of Mexico fabrication and nuclear will outperform other US
end-markets."
Gleacher has a "Buy" rating on the the stocks mentioned above.
Flour closed Monday at $57.98, gaining $0.39, or 0.68 percent. Foster Wheeler ended the session at $29.11, rising by $0.33, or 1.15 percent. McDermott International closed the day at $18.17, dropping $0.22, or 1.20 percent. KBR ended at $27.68, losing $0.06, or 0.22 percent.
Affymax's (NASDAQ:AFFY) Hemitide Remains on Track
The process of filing for Affymax's (NASDAQ:AFFY) dialysis treatment, Hematide, remains on track, and Baird maintains their "Outperform" rating on the company.
Baird said, "We continue to recommend purchase of AFFY shares following management's confirmation that pursuant to a pre-NDA meeting with FDA, Hematide's US dialysis filing remains on track (Q211). Despite the stock's post-ASN run - up - 30% versus BTK flat - on an improved outlook for Hematide's approvability in dialysis, we continue to perceive the risk/reward on AFFY shares as favorable, and remain buyers into the low teens."
Affymax closed Monday at $7.16, falling $0.40, or 5.29 percent. Baird has a price target of $13 on them.
Baird said, "We continue to recommend purchase of AFFY shares following management's confirmation that pursuant to a pre-NDA meeting with FDA, Hematide's US dialysis filing remains on track (Q211). Despite the stock's post-ASN run - up - 30% versus BTK flat - on an improved outlook for Hematide's approvability in dialysis, we continue to perceive the risk/reward on AFFY shares as favorable, and remain buyers into the low teens."
Affymax closed Monday at $7.16, falling $0.40, or 5.29 percent. Baird has a price target of $13 on them.
BP (NYSE:BP) Sells Stake in Pan American Energy for $7.06 Billion
BP (NYSE:BP) has moved $7 billion closer to its goal of raising about $30 billion to pay for its liabilities arising from the Gulf of Mexico oil spill.
Their latest divestiture is their 60 percent stake in Pan American Energy, which they've reportedly sold for $7.06 billion.
BP Chief Executive Officer Bob Dudley said, "Today's agreement further demonstrates both the high quality and attractiveness of the assets throughout BP's portfolio, and also the company's ability to meet our significant financial commitments arising from the Gulf of Mexico tragedy."
With this sale it brings the total raised from selling assets by BP to about $20 billion. The goal of BP is to raise an additional $10 billion by the end of 2011, added the company.
Pan American participated in oil and gas exploration, along with production in relationship to Bridas Corp., which owns 40 percent of Pan American. China National Offsore Oil Corp. owns half of Bridas.
China National Offshore Corp is the company acquiring the 60 percent stake of BP's in Pan American.
Their latest divestiture is their 60 percent stake in Pan American Energy, which they've reportedly sold for $7.06 billion.
BP Chief Executive Officer Bob Dudley said, "Today's agreement further demonstrates both the high quality and attractiveness of the assets throughout BP's portfolio, and also the company's ability to meet our significant financial commitments arising from the Gulf of Mexico tragedy."
With this sale it brings the total raised from selling assets by BP to about $20 billion. The goal of BP is to raise an additional $10 billion by the end of 2011, added the company.
Pan American participated in oil and gas exploration, along with production in relationship to Bridas Corp., which owns 40 percent of Pan American. China National Offsore Oil Corp. owns half of Bridas.
China National Offshore Corp is the company acquiring the 60 percent stake of BP's in Pan American.
Copper Demand to Exceed Supply Through 2013 Says GFMS
A report from the GFMS entitled Quarterly Three-Year Copper Forecast, says the supply of copper won't be able to keep up with demand through 2013.
The report concludes copper prices will rise as the copper market continues to be tight throughout that period, although an expected slowdown in the first half of 2011 could result in a temporarily copper surplus.
While production would be expected to meet that growing demand because of plans to increase output, secondary factors such as labor problems, low-quality grades, political effects and other operational risks associated with the industry in general will probably temper the production growth and not allow it to reach desired levels.
Over the next three years refined production is estimated to increase by about 3.4 percent annually through 2013.
The result of all of this in relationship to copper price should be a continual rise in price, which could easily reach above $11,000 a ton in 2013, according to the report.
Even though China may cut back on commodity imports in general and copper imports specifically, they will still account for just under 66 percent of the increase in global copper consumption annually during the time period we're talking about.
Add to this this the growing interest by investors in copper and commodities, and there is sure to be an increased flow of money into the metal.
Bottom line is it seems copper producers and investors are in for a volatile but profitable ride over the next three years.
The report concludes copper prices will rise as the copper market continues to be tight throughout that period, although an expected slowdown in the first half of 2011 could result in a temporarily copper surplus.
While production would be expected to meet that growing demand because of plans to increase output, secondary factors such as labor problems, low-quality grades, political effects and other operational risks associated with the industry in general will probably temper the production growth and not allow it to reach desired levels.
Over the next three years refined production is estimated to increase by about 3.4 percent annually through 2013.
The result of all of this in relationship to copper price should be a continual rise in price, which could easily reach above $11,000 a ton in 2013, according to the report.
Even though China may cut back on commodity imports in general and copper imports specifically, they will still account for just under 66 percent of the increase in global copper consumption annually during the time period we're talking about.
Add to this this the growing interest by investors in copper and commodities, and there is sure to be an increased flow of money into the metal.
Bottom line is it seems copper producers and investors are in for a volatile but profitable ride over the next three years.
Western Union (NYSE:WU) Branding Strong in India
Western Union Co. (NYSE:WU) has been making solid inroads into the Indian market, and they have a strong presence in the country with over 10,000 retail stores opened there over the last year, and close to 50,000 in the country overall.
Susquehanna noted, "The India Post Office is also a WU agent, apart from doing its own money transfers. However, our research suggests WU is trusted more because it is full fledged - WU advertises heavily (high brand awareness) and has many more locations providing instant money."
Customer service has also been increasingly considered strong in India, and that implies sustainable and supportive growth.
Western Union closed Monday at $17.86, losing $0.29, or 1.60 percent.
Susquehanna noted, "The India Post Office is also a WU agent, apart from doing its own money transfers. However, our research suggests WU is trusted more because it is full fledged - WU advertises heavily (high brand awareness) and has many more locations providing instant money."
Customer service has also been increasingly considered strong in India, and that implies sustainable and supportive growth.
Western Union closed Monday at $17.86, losing $0.29, or 1.60 percent.
CPI International (Nasdaq:CPII) Acquired by Veritas Capital
CPI International (Nasdaq:CPII) has been acquired by Veritas Capital for close to $525 million, subject to customary regulatory and shareholder approval.
On the shareholder side, it already looks like there will be no problem, as CPI shareholders holding 49 percent of stock have already signaled they support the deal.
Commenting on the deal, Canaccord said, "CPI has inked a deal with private-equity firm Veritas Capital to be acquired for about $525 million. The California-based provider of microwave, radio frequency and power and control solutions said the offer amounted to $19.50 a share, a 35% premium to the prior-day close and a level the shares haven’t seen in years."
CPI's management and board of directors support the deal as well.
Joe Caldarelli, chief executive of CPI, said, “Our board of directors and management believe this transaction will provide considerable benefits for CPI’s customers, and CPI’s stockholders will benefit from a significant premium over the current stock price.”
CPI closed Monday at $19.26, falling slightly to by $0.05, or 0.26 percent.
On the shareholder side, it already looks like there will be no problem, as CPI shareholders holding 49 percent of stock have already signaled they support the deal.
Commenting on the deal, Canaccord said, "CPI has inked a deal with private-equity firm Veritas Capital to be acquired for about $525 million. The California-based provider of microwave, radio frequency and power and control solutions said the offer amounted to $19.50 a share, a 35% premium to the prior-day close and a level the shares haven’t seen in years."
CPI's management and board of directors support the deal as well.
Joe Caldarelli, chief executive of CPI, said, “Our board of directors and management believe this transaction will provide considerable benefits for CPI’s customers, and CPI’s stockholders will benefit from a significant premium over the current stock price.”
CPI closed Monday at $19.26, falling slightly to by $0.05, or 0.26 percent.
Google (NASDAQ:GOOG) May Have Acquired Groupon Says Webush
Wedbush added to the continuing rumors of a Google (NASDAQ:GOOG) acquisition of Groupon, citing a Vator.tv report they paid $2.5 billion for the property.
Assuming the rumors are fact, Wedbush says it would be "very positive as it bolsters Google's Local presence, enhances its Social Graph data, and better positions Google in its battle with Facebook."
They added Google's "connections to millions of local businesses around the world through Google Places and Google AdWords, Google clearly has the ability to accelerate Groupon’s already torrid growth."
Google closed Monday at $582.11, losing $7.89, or 1.34 percent. Wedbush maintains a "Neutral" rating on them and a price target of $575.
Assuming the rumors are fact, Wedbush says it would be "very positive as it bolsters Google's Local presence, enhances its Social Graph data, and better positions Google in its battle with Facebook."
They added Google's "connections to millions of local businesses around the world through Google Places and Google AdWords, Google clearly has the ability to accelerate Groupon’s already torrid growth."
Google closed Monday at $582.11, losing $7.89, or 1.34 percent. Wedbush maintains a "Neutral" rating on them and a price target of $575.
Four Altria (NYSE:MO) Class Status Requests Rejected by Judge
Altria Group (NYSE:MO) had a court victory against claimants seeking class-action status concerning light cigarettes offered by the company, as four lawsuits filed against the cigarette maker were rejected concerning being allowed to proceed in class-action status.
Canaccord said, "A district court of Maine refused to grant class-action status to four suits leveled against Altria’s Philip Morris unit by smokers seeking refunds for light cigarettes. Smokers have alleged the tobacco company relied on deceptive advertisements in marketing its low-tar cigarettes; they claim that Philip Morris used descriptors to suggest the brands were less harmful than regular cigarettes, even though it knew users would be getting the same level of tar or nicotine from them. But the district court of Maine, which is coordinating multi-district litigation from several states on the matter, said that each state’s class includes everyone who purchased light cigarettes in the relevant limitations periods, which necessarily includes people who knew light cigarettes weren’t healthier than others."
The court ruled that "Those class members were not injured by the defendants’ misconduct and thus do not have standing. Furthermore, in view of the proliferation of information decrying the health risks of all cigarettes there is no telling how many potential class members are similarly situated.”
Altria isn't out of the legal waters yet though, as there are 15 more lawsuits waiting in the wings to be ruled on. Lawyers for Altria are optimistic this ruling will be persuasive concerning the remaining lawsuits and believed they'll be denied class status as well.
Altria closed Monday at $24.43, gaining $0.07, or 0.29 percent.
Canaccord said, "A district court of Maine refused to grant class-action status to four suits leveled against Altria’s Philip Morris unit by smokers seeking refunds for light cigarettes. Smokers have alleged the tobacco company relied on deceptive advertisements in marketing its low-tar cigarettes; they claim that Philip Morris used descriptors to suggest the brands were less harmful than regular cigarettes, even though it knew users would be getting the same level of tar or nicotine from them. But the district court of Maine, which is coordinating multi-district litigation from several states on the matter, said that each state’s class includes everyone who purchased light cigarettes in the relevant limitations periods, which necessarily includes people who knew light cigarettes weren’t healthier than others."
The court ruled that "Those class members were not injured by the defendants’ misconduct and thus do not have standing. Furthermore, in view of the proliferation of information decrying the health risks of all cigarettes there is no telling how many potential class members are similarly situated.”
Altria isn't out of the legal waters yet though, as there are 15 more lawsuits waiting in the wings to be ruled on. Lawyers for Altria are optimistic this ruling will be persuasive concerning the remaining lawsuits and believed they'll be denied class status as well.
Altria closed Monday at $24.43, gaining $0.07, or 0.29 percent.
Monday, November 29, 2010
Haringer Capital Fleeing NY Times (NYSE:NYT)
The failing NY Times (NYSE:NYT), which long ago abandoned mainstream America, has had one of their largest shareholders cut their stake again in the company, as Philip Falcone’s Harbinger Capital Partners sold off a large portion of their stake in the company, dropping now to a 2.58 percent level. At their highest point they owned a 7.41 percent stake in the faltering Times.
In a required regulatory filing, Harbinger said, “As of November 22, 2010, the Reporting Persons (in this case Harbinger Capital Partners Master Fund I, Ltd.) ceased to be beneficial owners of 5% or more of the outstanding Shares," in the newspaper.
Harbinger said they sold 7 million shares at a price of $8.13 a share for close to $57 million.
New York Times was trading at $8.94, losing $0.07, or 0.78 percent at 2:42 PM EDT.
In a required regulatory filing, Harbinger said, “As of November 22, 2010, the Reporting Persons (in this case Harbinger Capital Partners Master Fund I, Ltd.) ceased to be beneficial owners of 5% or more of the outstanding Shares," in the newspaper.
Harbinger said they sold 7 million shares at a price of $8.13 a share for close to $57 million.
New York Times was trading at $8.94, losing $0.07, or 0.78 percent at 2:42 PM EDT.
Microsoft (Nasdaq:MSFT) Pushing Windows Phone 7 Via Apps
As far as numbers go, Microsoft (Nasdaq:MSFT) doesn't even come close to the numbers of apps competitor Apple (Nasdaq:AAPL) has for their iPhone, which now stands at about 300,000, But the over 3,000 they do have are being offered at the lowest prices in the industry.
This is primarily a push by Microsoft to market their Windows Phone 7 during the Christmas season.
Canaccord says, "According to researchers at Distimo, who track sales of mobile phone applications, Microsoft’s Windows Phone 7 store boasts the lowest prices in the industry. The firm notes that paid-for applications in the new Windows Phone 7 store cost an average of $1.95. For the most popular 100, the average price is $2.54 – less than the average of $3.05 for most stores, but more expensive than those available for the Apple (Nasdaq: AAPL) iPhone. Launched last month, the Windows Phone 7 Marketplace boasts a catalogue of more than 3,000 applications, considerably more than the 1,350 the old Windows Marketplace for Mobile had last year. By contrast, Apple’s App Store has 300,000 applications, while Google’s (Nasdaq: GOOG) Android Marketplace boasts over 200,000 applications. Microsoft is making a big app push to promote the Windows Phone 7 this holiday season, integrating apps in Bing Visual Search results, as well as within the Xbox dashboard."
Microsoft was trading at $25.24, falling slightly to 0.01, or 0.04 percent at 2:47 PM EST.
This is primarily a push by Microsoft to market their Windows Phone 7 during the Christmas season.
Canaccord says, "According to researchers at Distimo, who track sales of mobile phone applications, Microsoft’s Windows Phone 7 store boasts the lowest prices in the industry. The firm notes that paid-for applications in the new Windows Phone 7 store cost an average of $1.95. For the most popular 100, the average price is $2.54 – less than the average of $3.05 for most stores, but more expensive than those available for the Apple (Nasdaq: AAPL) iPhone. Launched last month, the Windows Phone 7 Marketplace boasts a catalogue of more than 3,000 applications, considerably more than the 1,350 the old Windows Marketplace for Mobile had last year. By contrast, Apple’s App Store has 300,000 applications, while Google’s (Nasdaq: GOOG) Android Marketplace boasts over 200,000 applications. Microsoft is making a big app push to promote the Windows Phone 7 this holiday season, integrating apps in Bing Visual Search results, as well as within the Xbox dashboard."
Microsoft was trading at $25.24, falling slightly to 0.01, or 0.04 percent at 2:47 PM EST.
Amazon.com (NASDAQ:AMZN) PT Boosted on Increased Online Sales
The overall online retail sector exceeded expectations during Thanksgiving weekend and Amazon.com (NASDAQ:AMZN) had their price target increased by Susquehanna who re-evaluated after the strong performance.
Earnings estimates remain on hold because of a lack of information says the firm. There is also the free shipping and price competition which could lower margins and earnings for most retailers, making revenue numbers look good, but possibly little else once the data comes in after the Christmas holiday.
Online sales for Black Friday increased by 9 percent over last year, and by 28 percent on Thanksgiving day.
Amazon.com was trading at $179.82, gaining $2.62, or 1.48 percent at 2:38 PM EST. Susquehanna raised their price target on them from $150 to $170.
Earnings estimates remain on hold because of a lack of information says the firm. There is also the free shipping and price competition which could lower margins and earnings for most retailers, making revenue numbers look good, but possibly little else once the data comes in after the Christmas holiday.
Online sales for Black Friday increased by 9 percent over last year, and by 28 percent on Thanksgiving day.
Amazon.com was trading at $179.82, gaining $2.62, or 1.48 percent at 2:38 PM EST. Susquehanna raised their price target on them from $150 to $170.
Ford Motor (NYSE:F) Expanding Big in China
With second-tier and third-tier Chinese cities expected to generate the next growth cycle in China, Ford Motor (NYSE:F) has plans for an additional 66 dealerships in the country to prepare for the growth spurt.
Canaccord said, "The Wall Street Journal reported that Ford is planning to add 66 dealerships in China before the end of the year. The expansion of Ford's China sales effort will focus on what are considered the tier-two and tier-three cities in Western and Northern China. Ford said these cities are relatively unknown outside of China but have populations well over one million and are expected to help lead the next wave of growth in the Chinese economy. By the end of the year, China will have added 100 new dealerships in China with its partner Changan Automobile, by the end of the year. The total number of Ford dealerships in China will be roughly 340 by year-end. The Journal reported that Ford plans to launch four new products over the next three years in China, including the Ford Edge crossover vehicle next month. An executive at Ford said industry sales in China's overall vehicle market are likely to amount to "a little bit shy of 18 million" vehicles this year, from fewer than 13.5 million vehicles in 2009. He expects the growth to continue next year, saying an increase of 10% over 2010 "wouldn't be surprising.""
Ford was trading at $15.98, falling $0.12, or 0.71 percent at 2:31 PM EST.
Canaccord said, "The Wall Street Journal reported that Ford is planning to add 66 dealerships in China before the end of the year. The expansion of Ford's China sales effort will focus on what are considered the tier-two and tier-three cities in Western and Northern China. Ford said these cities are relatively unknown outside of China but have populations well over one million and are expected to help lead the next wave of growth in the Chinese economy. By the end of the year, China will have added 100 new dealerships in China with its partner Changan Automobile, by the end of the year. The total number of Ford dealerships in China will be roughly 340 by year-end. The Journal reported that Ford plans to launch four new products over the next three years in China, including the Ford Edge crossover vehicle next month. An executive at Ford said industry sales in China's overall vehicle market are likely to amount to "a little bit shy of 18 million" vehicles this year, from fewer than 13.5 million vehicles in 2009. He expects the growth to continue next year, saying an increase of 10% over 2010 "wouldn't be surprising.""
Ford was trading at $15.98, falling $0.12, or 0.71 percent at 2:31 PM EST.
Google (Nasdaq:GOOG) Agrees to Royalties in France
After a prolonged battle with French royalty-collecting agencies, Google (Nasdaq:GOOG) has come to an agreement to pay SCAM, ADAGP and SACD, representatives of various French workers in the entertainment industry.
This is primarily in reference to YouTube, going back to the time they entered the French market in 2007.
Terms of the agreement are only for content views in France, Belgium and Luxembourg, although the specifics of the rest of the terms weren't revealed, other than they'll extend through 2013.
Google has entered into similar agreements with the U.K., Italy and Spain.
Holders of copyrights get a piece of the advertising revenue generated by YouTube views.
This is primarily in reference to YouTube, going back to the time they entered the French market in 2007.
Terms of the agreement are only for content views in France, Belgium and Luxembourg, although the specifics of the rest of the terms weren't revealed, other than they'll extend through 2013.
Google has entered into similar agreements with the U.K., Italy and Spain.
Holders of copyrights get a piece of the advertising revenue generated by YouTube views.
OmniVision Technologies (NASDAQ:OVTI) Expected to Beat EPS Estimates
OmniVision Technologies (NASDAQ:OVTI) is will report their latest quarterly results on November 30, and they're expected to exceed earnings expectations for the quarter.
Wedbush sees them positioned strongly in the market, and still having room to grow even though they're close to the top.
"We think seasonality trends will result in guidance below the ($0.42/$211MM) Street and our ($0.44/$226MM) estimates. We are lowering our FQ3 pro forma EPS estimate to $0.32 from $0.44 on revenue of $205MM (-13% Q/Q growth) down from $226MM," said Wedbush.
More than likely to generate more revenue OmniVision will move into the smartphone sector.
OmniVision was trading at $29.00, falling $1.01, or 3.37 percent at 2:13 PM EST. Wedbush has a price target on them of $34, raising it from $28.
Wedbush sees them positioned strongly in the market, and still having room to grow even though they're close to the top.
"We think seasonality trends will result in guidance below the ($0.42/$211MM) Street and our ($0.44/$226MM) estimates. We are lowering our FQ3 pro forma EPS estimate to $0.32 from $0.44 on revenue of $205MM (-13% Q/Q growth) down from $226MM," said Wedbush.
More than likely to generate more revenue OmniVision will move into the smartphone sector.
OmniVision was trading at $29.00, falling $1.01, or 3.37 percent at 2:13 PM EST. Wedbush has a price target on them of $34, raising it from $28.
CGG Veritas' (NYSE:CGV) Earnings Will Remain Under Pressure
Earnings for CGG Veritas (NYSE:CGV) will continue to be pressured, according to Jefferies, based mostly on excess capacity in the industry at this time.
Jefferies said, "We expect earnings will continue to face stiff headwinds during the next year primarily due to excess industry-wide marine capacity, recently exacerbated by competitors' newbuild plans. Also, delays in GOM activity and timing of the next lease sale clouds the outlook."
EPS estimates were lowered for 2011 from $0.32 to -0.14 and for 2012 from $0.84 to $0.79.
Jefferies reiterates their "Hold" rating on CGG, which was trading at $24.08, losing $1.09, or 4.33 percent at 1:56 PM EST. Jefferies has a price target on them of $20.
Jefferies said, "We expect earnings will continue to face stiff headwinds during the next year primarily due to excess industry-wide marine capacity, recently exacerbated by competitors' newbuild plans. Also, delays in GOM activity and timing of the next lease sale clouds the outlook."
EPS estimates were lowered for 2011 from $0.32 to -0.14 and for 2012 from $0.84 to $0.79.
Jefferies reiterates their "Hold" rating on CGG, which was trading at $24.08, losing $1.09, or 4.33 percent at 1:56 PM EST. Jefferies has a price target on them of $20.
Apple's (NASDAQ:AAPL) MacBook Air, iPad Sales Strong
It appears Apple's (NASDAQ:AAPL) MacBook Air has become the choice of Mac fans of many ages, and has been enjoying robust sales so far in the Christmas season. Also surprising some was the demand for iPods, which some thought was becoming a dead category.
Piper Jaffray analyst Gene Munster said, "We noticed that the iPad is gaining traction (driven by lower price vs. the Mac) among demographics in which the Mac has historically not been successful. The bottom line is that Apple's addressable market is expanding with the iPad, and as a result, we believe the potential for upside from the iPad increases over the next 12 months."
As far as the iPod, some third-party stores were experiencing shortages of the product because of the unexpected demand.
Now the question is, as with all retailers during the Christmas holiday, how much will their margins be affected by the need to cut prices in order to generate sales.
Most of Apple's products had prices cut more moderately than their competitors based on brand strength.
Apple was trading at $313.02, falling $1.98, or 0.63 percent at 1:56 PM EST.
Piper Jaffray analyst Gene Munster said, "We noticed that the iPad is gaining traction (driven by lower price vs. the Mac) among demographics in which the Mac has historically not been successful. The bottom line is that Apple's addressable market is expanding with the iPad, and as a result, we believe the potential for upside from the iPad increases over the next 12 months."
As far as the iPod, some third-party stores were experiencing shortages of the product because of the unexpected demand.
Now the question is, as with all retailers during the Christmas holiday, how much will their margins be affected by the need to cut prices in order to generate sales.
Most of Apple's products had prices cut more moderately than their competitors based on brand strength.
Apple was trading at $313.02, falling $1.98, or 0.63 percent at 1:56 PM EST.
Polypore International (NYSE:PPO) Looks Strong in EV Space
As far as the electric vehicle (EV) segment goes, Polypore International (NYSE:PPO) looks good as a supplier of material the industry uses to develop their products.
Needham said, "We had the opportunity to meet with management (CEO Bob Toth and CFO Lynn Amos) to discuss the competitive landscape and electric vehicle (EV) opportunity. In our view, the company has a technical advantage and is solidly positioned to help usher in a new era of transportation as a supplier of critical material that is helping to power the EV industry."
That's the nice thing about being a supplier of picks in shovels. Even if electric cars aren't that successful, the obsession of them by some guarantees companies like Polypore will be successful for some time, even if the overall industry doesn't do that well.
Needham maintains a "Strong Buy" rating on Polypore, which was trading at $32.91, down by $0.20, or 0.60 percent. Needham has a price target on them of $38.
Needham said, "We had the opportunity to meet with management (CEO Bob Toth and CFO Lynn Amos) to discuss the competitive landscape and electric vehicle (EV) opportunity. In our view, the company has a technical advantage and is solidly positioned to help usher in a new era of transportation as a supplier of critical material that is helping to power the EV industry."
That's the nice thing about being a supplier of picks in shovels. Even if electric cars aren't that successful, the obsession of them by some guarantees companies like Polypore will be successful for some time, even if the overall industry doesn't do that well.
Needham maintains a "Strong Buy" rating on Polypore, which was trading at $32.91, down by $0.20, or 0.60 percent. Needham has a price target on them of $38.
Frontline (NYSE:FRO) Finds Support in Seaborne Oil Trade
Frontline Ltd (NYSE:FRO) no doubt faces some short-term challenges, the expanding role of oil transportation using the sea should help Frontline over the longer term.
FBR said, "Frontline reported a softer quarter due to weak rate realizations, as we expected. Concerns over 4Q10 earnings as well as the dividend level also drove the stock lower. While the near term is proving to be challenging, we continue to believe that Frontline is positioned to benefit from an increasing seaborne oil trade, as an increasing percentage of the world's oil is transported via the sea and as trade lanes lengthen. We believe the current softness in the tanker market presents an entry opportunity for FRO ahead of typically strong winter rates."
Frontline was trading at $26.03, dropping slightly by $0.02, or 0.008 percent. FBR lowered their price target on them from $44 to $40.
FBR said, "Frontline reported a softer quarter due to weak rate realizations, as we expected. Concerns over 4Q10 earnings as well as the dividend level also drove the stock lower. While the near term is proving to be challenging, we continue to believe that Frontline is positioned to benefit from an increasing seaborne oil trade, as an increasing percentage of the world's oil is transported via the sea and as trade lanes lengthen. We believe the current softness in the tanker market presents an entry opportunity for FRO ahead of typically strong winter rates."
Frontline was trading at $26.03, dropping slightly by $0.02, or 0.008 percent. FBR lowered their price target on them from $44 to $40.
AMAG Pharma (AMAG) Says No 'Black Box' Warning on Feraheme Label
After a press release from AMAG Pharma (NASDAQ:AMAG) saying they won't be including a "Black Box" warning on their Feraheme drug label, shares in the company have soared by over 14 percent on the day.
Feraheme is the main growth vehicle of the company at this time, and expectations on the Street were they would be hit with a Black Box warning. News they weren't surprised most people and caused them to pour money into the stock.
There are still a lot of questions that Amag will need to answer, but for now it's a probably first step toward turning things slowly around.
AMAG was trading at $16.05, soaring by $2.00, or 14.23 percent at 1:02 PM EST.
Feraheme is the main growth vehicle of the company at this time, and expectations on the Street were they would be hit with a Black Box warning. News they weren't surprised most people and caused them to pour money into the stock.
There are still a lot of questions that Amag will need to answer, but for now it's a probably first step toward turning things slowly around.
AMAG was trading at $16.05, soaring by $2.00, or 14.23 percent at 1:02 PM EST.
Adobe's (NASDAQ:ADBE) Earnings Estimate Raised by Jefferies
Jefferies maintains their "Buy" rating and price target on Adobe (NASDAQ:ADBE), but has changed their EPS and revenue estimates in 2012 from $2.43/4.51 billion to $2.45/4.44 billion
For 2011, they see Adobe struggling to reach growth expectations. They said, "Our survey work points to decent CS adoption, we and the Street continue to model below management's growth expectations for FY11 and the valuation is compelling."
Adobe was trading at $28.09, dropping by $0.63, or 2.19 percent at 1:02 PM EST. Jefferies has a price target of $34 on them.
For 2011, they see Adobe struggling to reach growth expectations. They said, "Our survey work points to decent CS adoption, we and the Street continue to model below management's growth expectations for FY11 and the valuation is compelling."
Adobe was trading at $28.09, dropping by $0.63, or 2.19 percent at 1:02 PM EST. Jefferies has a price target of $34 on them.
Citigroup (NYSE:C) Chooses Target (NYSE:TGT), Macy's (NYSE:M) as Top Christmas Picks
After a robust shopping weekend after Thanksgiving in America, Citigroup (NYSE:C) said they're raising their same-store estimates for the Christmas season, increasing them for November from 1.5 percent to 2.5 percent, and for December from 2 percent to 3 percent.
Contrasting last year's sales to this year during the same weekend, Citi noted a major boost of 33 percent for online spending on Thanksgiving day, and a 16 percent increase on Black Friday.
Along with Target and Macy's, other stores enjoying strong Black Friday sales were Saks (NYSE:SKS) and Kohl's (NYSE:KSS).
All of this sounds positive, but it remains to be seen at what costs the larger numbers are being attained, as stores around the country are under severe pricing and margin pressure in order to attract customers during the major shopping season.
It seems traders are considering that as well, as Target was trading at $56.36, falling $0.49, or 0.86 percent at 12:50 PM EST. Kohl's was trading at $56.40, down by $0.94, or 1.64 percent. Citi has a price target of $72 on Target and $33 on Kohl's.
Contrasting last year's sales to this year during the same weekend, Citi noted a major boost of 33 percent for online spending on Thanksgiving day, and a 16 percent increase on Black Friday.
Along with Target and Macy's, other stores enjoying strong Black Friday sales were Saks (NYSE:SKS) and Kohl's (NYSE:KSS).
All of this sounds positive, but it remains to be seen at what costs the larger numbers are being attained, as stores around the country are under severe pricing and margin pressure in order to attract customers during the major shopping season.
It seems traders are considering that as well, as Target was trading at $56.36, falling $0.49, or 0.86 percent at 12:50 PM EST. Kohl's was trading at $56.40, down by $0.94, or 1.64 percent. Citi has a price target of $72 on Target and $33 on Kohl's.
Citigroup (NYSE:C) Bumps Up Deere's (NYSE:DE) Price Target
Citigroup (NYSE:C) has a "Buy" rating on Deere & Company (NYSE:DE) and bumped up their price target significantly on the equipment maker.
Citi said their "Buy" rating reflected slower tonnage in the North American market and sales growth estimates of 8 percent. Overall this could end up with operating profits declining over a period of time.
Earnings per share for full year 2011 are below consensus, with Citi seeing $5.21 a share, and consensus at $5.32. For 2012, earnings per share are estimated to come in at $6.00 by Citigroup, while consensus is at $6.32.
Deere & Company was trading at $75.72, falling $0.28, or 0.37 percent at 12:39 PM EST. Citi raised their price target on them from $75 to $87.
Citi said their "Buy" rating reflected slower tonnage in the North American market and sales growth estimates of 8 percent. Overall this could end up with operating profits declining over a period of time.
Earnings per share for full year 2011 are below consensus, with Citi seeing $5.21 a share, and consensus at $5.32. For 2012, earnings per share are estimated to come in at $6.00 by Citigroup, while consensus is at $6.32.
Deere & Company was trading at $75.72, falling $0.28, or 0.37 percent at 12:39 PM EST. Citi raised their price target on them from $75 to $87.
Rio Tinto (NYSE:RIO) Shrugs Off China's Higher Interest Rate Announcement
The announcement from the Deputy Governor of the People’s Bank of China that they'll probably raise interest rates soon in order to continue their battle against rising inflation didn't have much impact on Rio Tinto (NYSE:RIO), which announced they're going to continue to expand spending through 2011 to $11 billion, close to three times what they're spending in 2010.
The story of China is sometimes misunderstood or overreacted to, as even though they may cut back on spending and tighten their spending, it's a matter of degree, and they're still going to grow strongly, although probably not at the pace they have been.
Demand for some raw materials may fall, but China also likes to stockpile as well, so it's hard to tell the depth of the decline in imports they make in relationship to commodities.
Rio knows that China will continue to buy over time, and whatever steps they take in the short term does nothing to change the demand for commodities over the long term which is far from being exhausted.
Rio Tinto CEO Tom Albanese sees there being more volatility in the short to mid-term. He said, “The long-term picture remains very positive for our businesses, but there remain a number of risks in the mid-to- near term, and for us this points to continued volatility.”
Of the approximate $11 billion budget projected for 2011, about 40 percent of that will be set aside for the iron ore sector.
The story of China is sometimes misunderstood or overreacted to, as even though they may cut back on spending and tighten their spending, it's a matter of degree, and they're still going to grow strongly, although probably not at the pace they have been.
Demand for some raw materials may fall, but China also likes to stockpile as well, so it's hard to tell the depth of the decline in imports they make in relationship to commodities.
Rio knows that China will continue to buy over time, and whatever steps they take in the short term does nothing to change the demand for commodities over the long term which is far from being exhausted.
Rio Tinto CEO Tom Albanese sees there being more volatility in the short to mid-term. He said, “The long-term picture remains very positive for our businesses, but there remain a number of risks in the mid-to- near term, and for us this points to continued volatility.”
Of the approximate $11 billion budget projected for 2011, about 40 percent of that will be set aside for the iron ore sector.
Solera (NYSE:SLH) Should Accelerate Acquisitions Over Next 6 Months
With the recent strength of the U.S. dollar, short-term revenue and earnings for Solera (NYSE:SLH) will be under pressure, but that shouldn't stop them from their quest to grow through acquisition.
Needham & Company thinks the strength of the U.S. dollar won't have too much effect upon Solera in the short term, and they'll continue to enjoy strong margins.
Needham said, "We have haircut our out-quarter estimates as the USD has recently appreciated versus the EUR (approximately 50% of Solera’s revenues are denominated in Euros). There is no change to our fundamental outlook. We believe that Solera is poised to continue to drive Adjusted EBITDA margins higher from the 43.9% mark posted in the most recent September quarter. We expect Solera to accelerate the pace of acquisitions between now and the June 2011 quarter as the most recent acquisition of material size was Solera’s October 2009 acquisition of AUTOonline."
Solera is trading at $48.41, falling $0.57, or 1.16 percent as of 12:19 PM EST. Needham has a "Buy" rating on them and a price target of $57, which they lowered from $58.
Needham & Company thinks the strength of the U.S. dollar won't have too much effect upon Solera in the short term, and they'll continue to enjoy strong margins.
Needham said, "We have haircut our out-quarter estimates as the USD has recently appreciated versus the EUR (approximately 50% of Solera’s revenues are denominated in Euros). There is no change to our fundamental outlook. We believe that Solera is poised to continue to drive Adjusted EBITDA margins higher from the 43.9% mark posted in the most recent September quarter. We expect Solera to accelerate the pace of acquisitions between now and the June 2011 quarter as the most recent acquisition of material size was Solera’s October 2009 acquisition of AUTOonline."
Solera is trading at $48.41, falling $0.57, or 1.16 percent as of 12:19 PM EST. Needham has a "Buy" rating on them and a price target of $57, which they lowered from $58.
Pakistan Looking to Monsanto (NYSE:MON) for Cotton Solutions
Struggling with cotton productivity, Pakistan is in negotiations with Monsanto (NYSE:MON) to provide answers for the cotton industry in the country.
In a seminar addressing the issues, areas of interest covered included the "introduction of insect resistance and herbicide tolerance technologies, research collaboration between Monsanto and Pakistan Research Institutes, capacity building of local seed companies and technology fee payment by the Punjab government for any unauthorized spread off Monsanto’s proprietary technologies."
While noting the problems of scarcity of water, disease, insects, and enough seeds to plant aren't unique to Pakistan, they haven't put forth systematic efforst to deal with the problems in the cotton industry, which in their view includes working with a partner like Monsanto.
Per the negotiations, if successful, Pakistan would gain legal access to the technology of Monsanto, giving them access to their pipeline.
Particular products being looked at in the market include Monsanto’s CEMB single-gene and double-gene Bt, single-gene Bt, Chinese fusion gene Bt and double-gene Bt, Monsanto’s double-gene Bt (BG II), Roundup Ready and Roundup Ready (RR) Flex and BG II x BR Flex Stack.
Pakistan is also looking to Monsanto to develop a drought resistance cottong variety by 2018.
In a seminar addressing the issues, areas of interest covered included the "introduction of insect resistance and herbicide tolerance technologies, research collaboration between Monsanto and Pakistan Research Institutes, capacity building of local seed companies and technology fee payment by the Punjab government for any unauthorized spread off Monsanto’s proprietary technologies."
While noting the problems of scarcity of water, disease, insects, and enough seeds to plant aren't unique to Pakistan, they haven't put forth systematic efforst to deal with the problems in the cotton industry, which in their view includes working with a partner like Monsanto.
Per the negotiations, if successful, Pakistan would gain legal access to the technology of Monsanto, giving them access to their pipeline.
Particular products being looked at in the market include Monsanto’s CEMB single-gene and double-gene Bt, single-gene Bt, Chinese fusion gene Bt and double-gene Bt, Monsanto’s double-gene Bt (BG II), Roundup Ready and Roundup Ready (RR) Flex and BG II x BR Flex Stack.
Pakistan is also looking to Monsanto to develop a drought resistance cottong variety by 2018.
BP (NYSE:BP) Has Bizarre Claims Made Against Them
Admitting there is no evidence anyone at BP (NYSE:BP) so-called "consciously" made an effort to undermine safety on the Deepwater Horizon oil rig, University of California at Berkeley professor Bob Bea concluded it was the "underlying unconscious mind that governs the actions of an organization and its personnel," which resulted in the accident and its consequences.
What a bizarre conclusion. And this guy is teaching the young people of America!
In other words, the new media age doesn't allow for the nonsense of drawing unprovable conlusions, so the mystical unconscious mind created by the BP management is supposedly behind the catastrophe. And these people call themselves scientists, and are expected to be taken seriously. Sounds like voodoo, not science.
Bea stated: "Perhaps there is no clear-cut 'evidence' that someone in BP or in the other organizations in the Macondo well project made a conscious decision to put costs before safety; nevertheless, that misses the point. It is the underlying unconscious mind that governs the actions of an organization and its personnel."
That BEA says it "misses the point," is actually missing the point.
This was the group of 60 scientists and independent offshore drilling "experts" called the Deepwater Horizon Study Group which came to this conclusion.
Even though there is absolutely no proof of this on the part of BP, certain elements of the university and scientific community simply can't stand that the narrative couldn't be created that BP did this in attempts to save time and money at the expense of safety.
Nobody doubts things could have been handled better, that's why the accident happened, because there were failures. But to appeal to the unconscious mind as to what governs BP, and by extension, other businesses and organizations, is a bizarre and strange way of looking at circumstances. But then again, this has come from the cradle of the failed California experiment, which embraces this type of mysticism.
What a bizarre conclusion. And this guy is teaching the young people of America!
In other words, the new media age doesn't allow for the nonsense of drawing unprovable conlusions, so the mystical unconscious mind created by the BP management is supposedly behind the catastrophe. And these people call themselves scientists, and are expected to be taken seriously. Sounds like voodoo, not science.
Bea stated: "Perhaps there is no clear-cut 'evidence' that someone in BP or in the other organizations in the Macondo well project made a conscious decision to put costs before safety; nevertheless, that misses the point. It is the underlying unconscious mind that governs the actions of an organization and its personnel."
That BEA says it "misses the point," is actually missing the point.
This was the group of 60 scientists and independent offshore drilling "experts" called the Deepwater Horizon Study Group which came to this conclusion.
Even though there is absolutely no proof of this on the part of BP, certain elements of the university and scientific community simply can't stand that the narrative couldn't be created that BP did this in attempts to save time and money at the expense of safety.
Nobody doubts things could have been handled better, that's why the accident happened, because there were failures. But to appeal to the unconscious mind as to what governs BP, and by extension, other businesses and organizations, is a bizarre and strange way of looking at circumstances. But then again, this has come from the cradle of the failed California experiment, which embraces this type of mysticism.
Boeing's (NYSE:BA) Design Changes on 787 Going Well
After the fire on a 787 connected to the power distribution panels caused concern over the future of the panels for Boeing (NYSE:BA), as it wasn't immediately known whether or not it was going to result in a major redesign or only needed to be tweaked.
That has been resolved, as the company recently announced they would only need to make some minor changes to the panels in response to the fire, which was caused by a short circuit in one of the power distribution panels. The short circuit was the result of foreign debris lodging in the panel.
One change being made is with the software which will have improvements made to increase fault protection. Boeing says the all the minor changes are proceeding well.
Jefferies said they are in agreement with the conclusions of Boeing, and see positive things going forward for the company. They maintain their "Buy" rating on them, along with their 2010,11,12 earnings per share estimates of $3.90, $5.00, and $6.00, while raising their price target.
Boeing closed Friday at $64.80, falling $0.61, or 0.93 percent. Jefferies has a price target of $80 on them.
That has been resolved, as the company recently announced they would only need to make some minor changes to the panels in response to the fire, which was caused by a short circuit in one of the power distribution panels. The short circuit was the result of foreign debris lodging in the panel.
One change being made is with the software which will have improvements made to increase fault protection. Boeing says the all the minor changes are proceeding well.
Jefferies said they are in agreement with the conclusions of Boeing, and see positive things going forward for the company. They maintain their "Buy" rating on them, along with their 2010,11,12 earnings per share estimates of $3.90, $5.00, and $6.00, while raising their price target.
Boeing closed Friday at $64.80, falling $0.61, or 0.93 percent. Jefferies has a price target of $80 on them.
Auxilium (NASDAQ:AUXL) Should Suffer Minimum Impact from Eli Lilly's (NYSE:LLY) Axiron
According to Jefferies, the recent approval by the FDA of Eli Lilly's (NYSE:LLY) Axiron shouldn't have a dramatic impact on Auxilium (NASDAQ:AUXL), as their key product driving the company is Xiaflex.
Jefferies said, "We believe Xiaflex adoption is gated by reimbursement concerns rather than clinical concerns and anticipate steady Xiaflex sales growth in 2011 with sales acceleration in 2012. We remain positive on a long-term peak sales potential in excess of $500m."
Although Jefferies doesn't believe Axiron will take over the entire market now served by Auxilium's Testim, it will take a big share, as it produced an 84 percent success rate versus Testim's 74 percent success rate.
Jefferies maintains a "Buy" rating on Auxilium, which closed Friday at $19.58, dropping $0.08, or 0.41 percent.
Jefferies said, "We believe Xiaflex adoption is gated by reimbursement concerns rather than clinical concerns and anticipate steady Xiaflex sales growth in 2011 with sales acceleration in 2012. We remain positive on a long-term peak sales potential in excess of $500m."
Although Jefferies doesn't believe Axiron will take over the entire market now served by Auxilium's Testim, it will take a big share, as it produced an 84 percent success rate versus Testim's 74 percent success rate.
Jefferies maintains a "Buy" rating on Auxilium, which closed Friday at $19.58, dropping $0.08, or 0.41 percent.
Deere (NYSE:DE) Earnings, Price Target Boosted by Argus
Saying they see Deere (NYSE:DE) continuing to perform strongly into 2011, based on their latest quarterly report, Argus Research maintains their "Buy" rating on them, while raising their price target significantly.
Argus said the latest quarterly results were "much better than we expected..." and believe that there will be "continued strong results in fiscal 2011."
Earnings estimates for full year 2011 were raised from $4.85 to $4.95 and set a full year 2012 estimate of $5.30.
Deere & Company closed Friday at $76.00, losing $0.23, or 0.30 percent. Argus raised their price target on them from $76 to $88.
Argus said the latest quarterly results were "much better than we expected..." and believe that there will be "continued strong results in fiscal 2011."
Earnings estimates for full year 2011 were raised from $4.85 to $4.95 and set a full year 2012 estimate of $5.30.
Deere & Company closed Friday at $76.00, losing $0.23, or 0.30 percent. Argus raised their price target on them from $76 to $88.
United Online (NASDAQ:UNTD) to be Driven by Classmates Media in 2011
According to Gleacher & Co., they see United Online (NASDAQ:UNTD) having reached the turning point concerning growth going forward, mostly driven by their Classmates Media business.
Gleacher said, "We believe UNTD is well-positioned to grow total revenue and overall OIBDA in FY11. This, in our view, marks the turning point for the stock, as we believe investors will begin to view UNTD as a growth company rather than one that is weighed down by a declining dial-up business. We note that In FY11, UNTD will no longer face a tough y/y comparison due to its decision to exit the post-transaction marketing business (about $27mil in revenue in FY09) at the end of January in 2010. Also, the magnitude of decline in its dial-up business should be much less than a year ago ($44mil in FY10 vs. $30mil in FY11). With its FTD business expected to remain at least flat, its Classmates Media business will serve as the key growth driver for the company and for the stock in 2011, in our view."
Gleacher maintains a "Buy" rating on United Online, which closed Friday at $6.20, losing $0.11, or 1.74 percent. Gleacher has a price target of $10 on them.
Gleacher said, "We believe UNTD is well-positioned to grow total revenue and overall OIBDA in FY11. This, in our view, marks the turning point for the stock, as we believe investors will begin to view UNTD as a growth company rather than one that is weighed down by a declining dial-up business. We note that In FY11, UNTD will no longer face a tough y/y comparison due to its decision to exit the post-transaction marketing business (about $27mil in revenue in FY09) at the end of January in 2010. Also, the magnitude of decline in its dial-up business should be much less than a year ago ($44mil in FY10 vs. $30mil in FY11). With its FTD business expected to remain at least flat, its Classmates Media business will serve as the key growth driver for the company and for the stock in 2011, in our view."
Gleacher maintains a "Buy" rating on United Online, which closed Friday at $6.20, losing $0.11, or 1.74 percent. Gleacher has a price target of $10 on them.
Logitech (Nasdaq:LOGI) Removed from Goldman's (NYSE:GS) Conviction Sell List
Goldman Sachs (NYSE:GS) has removed Logitech (Nasdaq:LOGI) from their Conviction Buy List, although they maintain their "Sell" rating on them.
Goldman cited as the reason for their actions "a raised valuation multiple to capture expected growth driven by Digital Home and LifeSzie, despite threats to the core PC Peripherals business."
Logitech was added to Goldman's Conviction Buy List on September 15, and since that time has soared close to 30 percent.
Logitech closed Friday at $20.41, dropping $0.14, or 0.68 percent.
Goldman cited as the reason for their actions "a raised valuation multiple to capture expected growth driven by Digital Home and LifeSzie, despite threats to the core PC Peripherals business."
Logitech was added to Goldman's Conviction Buy List on September 15, and since that time has soared close to 30 percent.
Logitech closed Friday at $20.41, dropping $0.14, or 0.68 percent.
Silver Wheaton (NYSE:SLW), Silvercorp Metals (NYSE:SVM) Ratings Changed by BMO Capital
As the price of gold continues to go up, silver is increasingly being looked at as an investment metal, and not just an industrial one, which has drawn the attention of analysts who are carefully watching companies like Silver Wheaton (NYSE:SLW) and Silvercorp Metals (NYSE:SVM), which had their ratings changed by BMO Capital.
Silver Wheaton, which has a terrific business model, was upgraded from "Market Perform" to "Outperform." Silvercorp Metals was downgraded from "Outperform" to "Market "Perform."
Silver Wheaton closed Friday at $35.15, falling $0.49, or 1.37 percent. BMO has a prict target of $46 on them, raising it from $40.
Silvercopr Metals closed at $11.74, dropping $0.54, or 4.40 percent.
Silver Wheaton, which has a terrific business model, was upgraded from "Market Perform" to "Outperform." Silvercorp Metals was downgraded from "Outperform" to "Market "Perform."
Silver Wheaton closed Friday at $35.15, falling $0.49, or 1.37 percent. BMO has a prict target of $46 on them, raising it from $40.
Silvercopr Metals closed at $11.74, dropping $0.54, or 4.40 percent.
China Nepstar (NYSE:NPD) Facing Margin, Earnings Challenges
China Nepstar (NYSE:NPD), which operates operates retail drugstores in China, was downgraded by Goldman Sachs (NYSE:GS) from "Neutral" to "Sell."
Of particular note cited by Goldman was the removal of hospital drug mark-ups of 15%, which will put the retail pharmacy industry as a disadvantage in china.
Also mentioned is the rising operational costs, also expected to put additional pressure on Nepstar's margins.
Nepstar closed Friday at $3.55, losing $0.33, or 8.51 percent.
Of particular note cited by Goldman was the removal of hospital drug mark-ups of 15%, which will put the retail pharmacy industry as a disadvantage in china.
Also mentioned is the rising operational costs, also expected to put additional pressure on Nepstar's margins.
Nepstar closed Friday at $3.55, losing $0.33, or 8.51 percent.
Alcoa (NYSE:AA) Expanding Bauxite Production at Juruti Mine
Alcoa Inc. (NYSE:AA) says it has plans to increase bauxite production at its Juruti mine in the Amazon in 2011.
Production at the mine began in June 2009, with the capacity to product 2.6 million tons of bauxite a year. After the immediate expansion, expectations are production will increase to 3.3 million metric tons a year in the short term.
As studies continue on, expansion in the long term should result in capacity at Juruti reaching 6 million tons of bauxite a year, according to Juruti's geological expert Clodoaldo Castro
Alcoa closed Friday at $13.17, dropping $0.14, or 1.05 percent.
Production at the mine began in June 2009, with the capacity to product 2.6 million tons of bauxite a year. After the immediate expansion, expectations are production will increase to 3.3 million metric tons a year in the short term.
As studies continue on, expansion in the long term should result in capacity at Juruti reaching 6 million tons of bauxite a year, according to Juruti's geological expert Clodoaldo Castro
Alcoa closed Friday at $13.17, dropping $0.14, or 1.05 percent.
Del Monte (NYSE:DLM) Unlikely to Receive Another Bid
Based on the probability Del Monte (NYSE:DLM) won't be receiving another acquisition bid, Deutsche Bank (NYSE:DB) downgraded them from "Buy" to "Hold."
Deutsche said, "Based on the Board’s acceptance of a buyout offer from KKR, Vestar and Centerview for $19 a share in cash, we are changing our fundamental-based opinion to HOLD. As we see it highly unlikely other bidders will emerge, we are also increasing our price target to $19...We aren’t too surprised at the deal multiples for Del Monte given the mix of the attractive pet food operations combined with more commodity-oriented canned FV&T."
Del Monte closed Friday's session at $18.83, gaining $0.84, or 4.67 percent. Deutsche increased their price target on them from $17 to $19 a share.
Deutsche said, "Based on the Board’s acceptance of a buyout offer from KKR, Vestar and Centerview for $19 a share in cash, we are changing our fundamental-based opinion to HOLD. As we see it highly unlikely other bidders will emerge, we are also increasing our price target to $19...We aren’t too surprised at the deal multiples for Del Monte given the mix of the attractive pet food operations combined with more commodity-oriented canned FV&T."
Del Monte closed Friday's session at $18.83, gaining $0.84, or 4.67 percent. Deutsche increased their price target on them from $17 to $19 a share.
Freeport's (NYSE:FCX) Debt, Margins, and Earnings
Freeport-McMoRan has exploded in share price since it bottomed out at $16.80 a share on December 1, 2008, and it's worth looking briefly at their current situation as it relates to debt, margins and earnings, which may challenge the company going forward.
The one thing to keep in mind concerning Freeport and all companies with heavy exposure to the right commodities, is rising prices can forgive a lot of weaknesses, but weaknesses still affect the bottom line of a company, and performances can be better even in the best of times.
Higher commodity prices have been the norm recently, but macroeconomic circumstances are dividing up the sector some, with particular commodities sure to continue doing well, but others falling by the wayside or reaching top price levels.
As far as Freeport or any commodity company, one must continue to closely watch debt levels and their costs, operational costs, margins, and that ultimately all leads to earnings.
Over the last several years Freeport has taken on more debt even as their equity increased. The problem is the debt-to-equity ratio has also increased, which isn't a good thing for the company. That means even in a bull commodity market their debt is increasing at higher levels. This doesn't mean Freeport is in danger, but the trend isn't good. Their debt-to-equity is a little over 41 percent at this time.
This has resulted in the gross margins of Freeport being under pressure, which is something that needs to be closely watched over the next year.
Other situations to watch is the China story as it relates to commodities, as they're in the midst of battling an inflation challenge, and that will probably result in slower growth and lower imports. That could cause lower sales for companies like Freeport, although China will still grow strongly, but not at the rate they have in the recent past.
Freeport can't do anything about the macroeconomic situation, but the things they can control like debt and operational costs need to be watched closely, along with the price trends of specific commodities.
It seems the period where the majority of commodities could be counted on to rise on general demand are over, and specific commodities will have to be watched in order to determine whether or not commodity prices will overcome elements which could result in lower margins and earnings.
For Freeport, they primarily mine copper, gold, silver, molybdenum and cobalt. Of those, copper is probably the most important to watch, as gold and silver in the current economic environment could help them overcome higher debt and costs, as prices will continue rising for some time.
Copper isn't necessarily guaranteed that anymore because of the probably cutbacks in places like China, and the ongoing weakness in building of new homes in the West, including the United States.
The one thing to keep in mind concerning Freeport and all companies with heavy exposure to the right commodities, is rising prices can forgive a lot of weaknesses, but weaknesses still affect the bottom line of a company, and performances can be better even in the best of times.
Higher commodity prices have been the norm recently, but macroeconomic circumstances are dividing up the sector some, with particular commodities sure to continue doing well, but others falling by the wayside or reaching top price levels.
As far as Freeport or any commodity company, one must continue to closely watch debt levels and their costs, operational costs, margins, and that ultimately all leads to earnings.
Over the last several years Freeport has taken on more debt even as their equity increased. The problem is the debt-to-equity ratio has also increased, which isn't a good thing for the company. That means even in a bull commodity market their debt is increasing at higher levels. This doesn't mean Freeport is in danger, but the trend isn't good. Their debt-to-equity is a little over 41 percent at this time.
This has resulted in the gross margins of Freeport being under pressure, which is something that needs to be closely watched over the next year.
Other situations to watch is the China story as it relates to commodities, as they're in the midst of battling an inflation challenge, and that will probably result in slower growth and lower imports. That could cause lower sales for companies like Freeport, although China will still grow strongly, but not at the rate they have in the recent past.
Freeport can't do anything about the macroeconomic situation, but the things they can control like debt and operational costs need to be watched closely, along with the price trends of specific commodities.
It seems the period where the majority of commodities could be counted on to rise on general demand are over, and specific commodities will have to be watched in order to determine whether or not commodity prices will overcome elements which could result in lower margins and earnings.
For Freeport, they primarily mine copper, gold, silver, molybdenum and cobalt. Of those, copper is probably the most important to watch, as gold and silver in the current economic environment could help them overcome higher debt and costs, as prices will continue rising for some time.
Copper isn't necessarily guaranteed that anymore because of the probably cutbacks in places like China, and the ongoing weakness in building of new homes in the West, including the United States.
Citigroup (NYSE:C), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) Drop on Irish Bank Ratings
Irish bank ratings from Standard & Poor’s Ratings Services pushed down the share prices of Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) on Friday, as they lowered their long-term counterparty credit ratings and ratings on the senior and subordinated debt of the Irish banks.
Citigroup ended the trading session at $4.11, dropping $0.058, or 1.39 percent. Bank of America closed at $11.12, losing $0.16, or 1.42 percent. Wells Fargo was down to $26.65 falling $0.46, or 1.71 percent.
JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) also took hits, with JPMorgan closing at $37.50, losing $0.66, or 1.73 percent. Goldman Sachs fell to $158.22, dropping $2.04, or 1.27 percent.
Citigroup ended the trading session at $4.11, dropping $0.058, or 1.39 percent. Bank of America closed at $11.12, losing $0.16, or 1.42 percent. Wells Fargo was down to $26.65 falling $0.46, or 1.71 percent.
JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) also took hits, with JPMorgan closing at $37.50, losing $0.66, or 1.73 percent. Goldman Sachs fell to $158.22, dropping $2.04, or 1.27 percent.
Buy LJ International (Nasdaq:JADE) on Weakness Says Roth Capital
With only one analyst and firm covering LJ International (Nasdaq:JADE) from Hong Kong, recommendations carry weight, and that was the case with Roth Capital's Elizabeth Pierce, who has recommended investors acquire shares of the jewelry company.
The share price plummeted on Wednesday based on rumors about an SEC investigation. But Pierce said she thinks the shares dropped not because of the rumors, but because of a big player selling their shares.
Traders plowed into the shares Friday in response, with volume reaching over 3 times the normal, daily 3-month average.
LJ International closed Friday at $4.17, surging by $0.34, or 8.88 percent.
The share price plummeted on Wednesday based on rumors about an SEC investigation. But Pierce said she thinks the shares dropped not because of the rumors, but because of a big player selling their shares.
Traders plowed into the shares Friday in response, with volume reaching over 3 times the normal, daily 3-month average.
LJ International closed Friday at $4.17, surging by $0.34, or 8.88 percent.
Google (Nasdaq:GOOG) Android Ads Growing Faster than Apple's (Nasdaq:AAPL) iOS
Kaufman Bros, said that the mobile ad market in the U.S. is poised to jump by 55 percent in 2011, as growth in 2010 should soar by 80 percent before the end of the year, and Google (Nasdaq:GOOG) Android's ad impressions are growing a lot faster then Apple's (Nasdaq:AAPL) iOS, which should make them the main beneficiary of the mobile ad growth going forward.
On average, Kaufman said mobile advertising campaigns are now at a range of about $75,000 to $100,000 each, not a small budget. Overall advertising in 2011 is estimated to reach about $1 billion.
Kaufman also noted that a number of large advertisers like Citigroup (NYSE:C), among a number of others, are allocating more of their advertising spend to mobile devices.
Google closed Friday at $590.00, falling $4.97, or 0.84 percent. Apple closed at $315.00, gaining $0.20, or 0.07 percent.
Kaufman maintains a "Buy" rating on Google, and have placed a price target of $650 on them.
On average, Kaufman said mobile advertising campaigns are now at a range of about $75,000 to $100,000 each, not a small budget. Overall advertising in 2011 is estimated to reach about $1 billion.
Kaufman also noted that a number of large advertisers like Citigroup (NYSE:C), among a number of others, are allocating more of their advertising spend to mobile devices.
Google closed Friday at $590.00, falling $4.97, or 0.84 percent. Apple closed at $315.00, gaining $0.20, or 0.07 percent.
Kaufman maintains a "Buy" rating on Google, and have placed a price target of $650 on them.
Friday, November 26, 2010
CIENA (NASDAQ:CIEN) Nortel MEN Revenue Uncertainty Concerns Analysts
The inability to get a firm grip on the actual run rate of revenues for the Nortel MEN group makes the stock a hard one to call, according to Auriga, which lowered earnings estimates on the company, while maintaining a "Hold" rating on them.
Auriga said, "Despite the near-term hurdles with respect to the macro environment and the pending launch of the 5400 platform, we recognize that successful integration of the Nortel assets is far more important to the stock. Given that our proprietary checks continue to suggest solid execution on this front, we are tempted to get more constructive on the name. However, we worry that a top-line reset may create significant pressure on the stock. Lack of visibility on the "true" run rate of revenues for the Nortel MEN group makes CIEN a challenging stock call."
Auriga also said they see the company reporting lower than estimated earnings in their next quarterly report.
Ciena closed Wednesday at $15.48, gaining $0.26, or 1.71 percent. Auriga has a price target of $14 on them.
Auriga said, "Despite the near-term hurdles with respect to the macro environment and the pending launch of the 5400 platform, we recognize that successful integration of the Nortel assets is far more important to the stock. Given that our proprietary checks continue to suggest solid execution on this front, we are tempted to get more constructive on the name. However, we worry that a top-line reset may create significant pressure on the stock. Lack of visibility on the "true" run rate of revenues for the Nortel MEN group makes CIEN a challenging stock call."
Auriga also said they see the company reporting lower than estimated earnings in their next quarterly report.
Ciena closed Wednesday at $15.48, gaining $0.26, or 1.71 percent. Auriga has a price target of $14 on them.
Goldman (NYSE:GS) Lowers EPS Estimates on Medtronic (NYSE:MDT)
Goldman Sachs (NYSE:GS) cut its earnings estimates on Medtronic (NYSE:MDT) while maintaining a "Neutral" rating on the company.
Earnings were lowered in 2011 from $3.45 to $3.40, in 2012 from $3.67 to $3.60 and for 2013 from $3.97 to $3.45.
Goldman said shrinking gross markets, lower sales guidance and interest income were the factors they considered in their decision.
A price target of $36 is placed on Medtronic from Goldman, which closed Wednesday at $34.18 a share.
Earnings were lowered in 2011 from $3.45 to $3.40, in 2012 from $3.67 to $3.60 and for 2013 from $3.97 to $3.45.
Goldman said shrinking gross markets, lower sales guidance and interest income were the factors they considered in their decision.
A price target of $36 is placed on Medtronic from Goldman, which closed Wednesday at $34.18 a share.
Patterson Companies (NASDAQ:PDCO) Differentiation Exceeding Expectations
Patterson Companies (NASDAQ:PDCO) can't do anything about the current economic environment, but they can add value to their clients via the differentiation of the products they offer, and that's what they're doing, according to Jefferies.
"An improving economic environment and steady consumables growth are required to drive shares meaningfully higher. In the meantime, PDCO continues to add value to clients through its differentiated technology/equipment offerings that, thus far, have exceeded our expectations," said Jefferies.
EPS estimate for full year 2011 was lowered to $1.93 from $1.94 and their revenue estimate was raised to $3.4 billion from $3.39 billion.
Patterson closed Wednesday at $30.19, gaining $1.15, or 3.96 percent. Jefferies has a price target of $35 on them, increasing it from $31. They also maintain their "Buy" rating on them.
"An improving economic environment and steady consumables growth are required to drive shares meaningfully higher. In the meantime, PDCO continues to add value to clients through its differentiated technology/equipment offerings that, thus far, have exceeded our expectations," said Jefferies.
EPS estimate for full year 2011 was lowered to $1.93 from $1.94 and their revenue estimate was raised to $3.4 billion from $3.39 billion.
Patterson closed Wednesday at $30.19, gaining $1.15, or 3.96 percent. Jefferies has a price target of $35 on them, increasing it from $31. They also maintain their "Buy" rating on them.
Northwest Pipe Company (NASDAQ:NWPX) Restatement Size Weighs on Them
Northwest Pipe Company (NASDAQ:NWPX) continues to work under the weight of the restatements they made for the third quarters of 2009 and 2010.
Jefferies said, "NWPX has recently filed financial statements for 3Q09 to 3Q10, and restated prior years' results. Its accounting may be resolved but we are concerned over the sizes of some restatements and the number of them, and their implications for future results."
EPS estimate was increased for full year 2010 to $0.16 from $0.15. Revenue estimate for full year 2010 from was increased from $304 million to $401.2 million. For full year 2012 the revenue estimate was established at $486.3 million, and EPS at $0.68.
Northwest Pipe closed Wednesday at $21.98, gaining $0.50, or 2.33 percent. Jefferies has a price target on them of $22, raising it from $17.
Jefferies said, "NWPX has recently filed financial statements for 3Q09 to 3Q10, and restated prior years' results. Its accounting may be resolved but we are concerned over the sizes of some restatements and the number of them, and their implications for future results."
EPS estimate was increased for full year 2010 to $0.16 from $0.15. Revenue estimate for full year 2010 from was increased from $304 million to $401.2 million. For full year 2012 the revenue estimate was established at $486.3 million, and EPS at $0.68.
Northwest Pipe closed Wednesday at $21.98, gaining $0.50, or 2.33 percent. Jefferies has a price target on them of $22, raising it from $17.
Pharmasset (Nasdaq:VRUS) Pipeline Still in Early Stages
Baird said they continue to recommend shares of Pharmasset (Nasdaq:VRUS), although it must be understood they they're still in the early stage of developing their pipeline.
Baird said, "Continue to recommend purchase on confirmatory FQ4-10 update. There were a few bits of incremental progress, in line with expectations and likely not stock-moving. We view Phase 2 data rollout as the best value-creating period to invest in Hepatitis C companies, and it’s still early innings there when considering VRUS’s full pipeline. The thesis is fully intact, catalyst flow is robust, and VRUS is likely to remain a top small-/emerging mid-cap idea heading into 2011."
For full year 2011, EPS was lowered from -$1.99 to -$2.15 and for full year 2012 from -$1.65 to -$2.10.
Pharmasset closed Wednesday at $43.59, gaining $1.41, or 3.34 percent.
Baird said, "Continue to recommend purchase on confirmatory FQ4-10 update. There were a few bits of incremental progress, in line with expectations and likely not stock-moving. We view Phase 2 data rollout as the best value-creating period to invest in Hepatitis C companies, and it’s still early innings there when considering VRUS’s full pipeline. The thesis is fully intact, catalyst flow is robust, and VRUS is likely to remain a top small-/emerging mid-cap idea heading into 2011."
For full year 2011, EPS was lowered from -$1.99 to -$2.15 and for full year 2012 from -$1.65 to -$2.10.
Pharmasset closed Wednesday at $43.59, gaining $1.41, or 3.34 percent.
Ashland's (NYSE:ASH) Low Valvoline Margins Lowering Earnings
Ashland (NYSE:ASH), like many companies, are dependent on a sustainable and legitimate recovery to grow in the future, and pressures from their low Valvoline margins will have the company struggling, even as other segments in the company do well.
Jefferies has lowered their earnings estimate on the company, while maintaining their "Buy" rating.
Jefferies said, "While near-term margin pressure in Valvoline may balance recoveries in other segments, we reiterate our Buy rating based on Ashland's significant operating leverage to a recovery and robust free cash flow."
EPS estimates were lowered for full year 2011 from $4.05 to $3.95 and from $4.65 $4.60 for full year 2012.
Revenue estimates for full year 2011 were increased from $5.5 billion to $5.6 billion and for full year 2012 from 5.79 billion to $5.89 billion.
Ashland closed Wednesday at $52.44, gaining $1.43, or 2.80 percent.
Jefferies has lowered their earnings estimate on the company, while maintaining their "Buy" rating.
Jefferies said, "While near-term margin pressure in Valvoline may balance recoveries in other segments, we reiterate our Buy rating based on Ashland's significant operating leverage to a recovery and robust free cash flow."
EPS estimates were lowered for full year 2011 from $4.05 to $3.95 and from $4.65 $4.60 for full year 2012.
Revenue estimates for full year 2011 were increased from $5.5 billion to $5.6 billion and for full year 2012 from 5.79 billion to $5.89 billion.
Ashland closed Wednesday at $52.44, gaining $1.43, or 2.80 percent.
Jack In The Box (NASDAQ:JACK) Battling to Rebuild Brand
Jack In The Box (NASDAQ:JACK) continues to struggle to rebuild its brand, and it's not coming cheap, as noted by Susquehanna, who maintains its "Neutral" rating on them, while lowering their price target.
Susquehanna said that, "growth. Lost company store profits from refranchising have not been offset by sufficient G&A savings and buybacks, and the margin gains from selling underperforming markets are being offset by food quality initiatives. In addition, the sales lift from re-models is being more than offset by related costs."
EPS for full year 2011 were lowered to $1.60 from $2.20 and its full year 2012 estimate is $1.97.
Jack In The Box closed Wednesday at $19.95, dropping $0.28, or 1.38 percent. Susquehanna has a price target of $20 on them, dropping by $2.
Susquehanna said that, "growth. Lost company store profits from refranchising have not been offset by sufficient G&A savings and buybacks, and the margin gains from selling underperforming markets are being offset by food quality initiatives. In addition, the sales lift from re-models is being more than offset by related costs."
EPS for full year 2011 were lowered to $1.60 from $2.20 and its full year 2012 estimate is $1.97.
Jack In The Box closed Wednesday at $19.95, dropping $0.28, or 1.38 percent. Susquehanna has a price target of $20 on them, dropping by $2.
Las Vegas Sands (NYSE:LVS) Price Target Boosted Over 30 Percent
Las Vegas Sands (NYSE:LVS) had the price target on them raised by over 30 percent, from $44 a share to $58 a share, by Argus, which also maintained a "Buy" rating on the company.
Reasons cited were "signs of improvement in Las Vegas, prospects for solid profitability in the near-term, capital availability, and the significant growth potential of the Marina Bay Sands in Singapore."
Also, "Management has eliminated substantial costs from its operations, particularly in Las Vegas, right-sizing the organization for the current business climate."
Earnings per share for full year 2010 were lifted from 72 cents to 74 cents and for full year 2011 from $1.06 to $1.12. Analysts are looking for EPS of 99 cents a share for 2010 and $1.68 for 2011.
Las Vegas Sands closed Wednesday at $50.93, gaining $1.87, or 3.81 percent.
Reasons cited were "signs of improvement in Las Vegas, prospects for solid profitability in the near-term, capital availability, and the significant growth potential of the Marina Bay Sands in Singapore."
Also, "Management has eliminated substantial costs from its operations, particularly in Las Vegas, right-sizing the organization for the current business climate."
Earnings per share for full year 2010 were lifted from 72 cents to 74 cents and for full year 2011 from $1.06 to $1.12. Analysts are looking for EPS of 99 cents a share for 2010 and $1.68 for 2011.
Las Vegas Sands closed Wednesday at $50.93, gaining $1.87, or 3.81 percent.
Best Buy (NYSE:BBY), 5 Cents Only (NYSE:NDN), Family Dollar (NYSE:FDO), Big 5 Sporting Goods (Nasdaq:BGFV) Among Retail LBO Possibilities
With consolidation activity increasing in the retail sector, Deutsche Bank (NYSE:DB) updated their LBO screen, which included companies rated a "Buy" like Best Buy (NYSE:BBY), 5 Cents Only Stores (NYSE:NDN), Family Dollar (NYSE:FDO) and Big 5 Sporting Goods (Nasdaq:BGFV).
Companies listed which included a "Hold" on them were RadioShack (NYSE:RSH), OfficeMax (NYSE:OMX) and Bed Bath & Beyond (Nasdaq:BBBY).
All of the stores listed above are in the top 7 from Deutsche LBO screen, and which also would expect to be acquired at a premium of 20 percent or more, other than Family Dollar.
RadioShack, the No. 1 company listed, closed Wednesday at $18.73, losing $0.29, or 1.52 percent. They could attract a bid as high as $30 a share.
Big Five Sporting Goods is No. 2 on the list, which closed Wednesday at $13.12, gaining $0.72, or 5.81 percent. They could received a bid as high as $17 a share.
OfficeMax is No. 3 on the list, and closed Wednesday at $17.91, rising by $0.94, or 5.54 percent. They could be acquired for as high as $22 a share.
Best Buy is No. 4 on Deutsche's list, and closed Wednesday at $44.81, increasing by $0.64, or 1.45 percent. Possible acquisition price for them could be $58 a share.
99 Cents Only Stores is in the No. 5 position, closing at $16.14 Wednesday, gaining $0.41, or 2.61 percent. An possible acquisition price of $20 was placed on them.
Bed Bath & Beyond is No. 6, and they closed at $44.32 Wednesday, rising by $1.59, or 3.72 percent. Possible acquisition price on them is $53.
Last among the top seven is Family Dollar, which closed Wednesday at $50.68, gaining $1.29, or 2.61 percent. Acquisition price for them was listed at $60 a share.
Companies listed which included a "Hold" on them were RadioShack (NYSE:RSH), OfficeMax (NYSE:OMX) and Bed Bath & Beyond (Nasdaq:BBBY).
All of the stores listed above are in the top 7 from Deutsche LBO screen, and which also would expect to be acquired at a premium of 20 percent or more, other than Family Dollar.
RadioShack, the No. 1 company listed, closed Wednesday at $18.73, losing $0.29, or 1.52 percent. They could attract a bid as high as $30 a share.
Big Five Sporting Goods is No. 2 on the list, which closed Wednesday at $13.12, gaining $0.72, or 5.81 percent. They could received a bid as high as $17 a share.
OfficeMax is No. 3 on the list, and closed Wednesday at $17.91, rising by $0.94, or 5.54 percent. They could be acquired for as high as $22 a share.
Best Buy is No. 4 on Deutsche's list, and closed Wednesday at $44.81, increasing by $0.64, or 1.45 percent. Possible acquisition price for them could be $58 a share.
99 Cents Only Stores is in the No. 5 position, closing at $16.14 Wednesday, gaining $0.41, or 2.61 percent. An possible acquisition price of $20 was placed on them.
Bed Bath & Beyond is No. 6, and they closed at $44.32 Wednesday, rising by $1.59, or 3.72 percent. Possible acquisition price on them is $53.
Last among the top seven is Family Dollar, which closed Wednesday at $50.68, gaining $1.29, or 2.61 percent. Acquisition price for them was listed at $60 a share.
Goldman (NYSE:GS) Says Tiffany (NYSE:TIF) Faces Tough Margins in 2011
Tiffany & Co. (NYSE:TIF) has been soaring recently after their earnings report, which was very strong for the jewelry retailer. Still, Goldman Sachs (NYSE:GS) said they see margins getting tougher in 2011.
Goldman said they "think the shares may find some support given the solid top-line results and much better than expected gross margins. However, with both sales and margin comparisons getting tougher in 2011, we are likely to see a slowing EPS growth trajectory."
Net income in the quarter for Tiffany rose to $55.1 million, or $0.43 a share, a gain of 27 percent over the $43.3 million generated last year in the same quarter.
Revenue for the quarter was up 14 percent, coming in at $681.73 million, up from last year's $598.21 million.
Analysts had been looking for revenue of $652.8 million, and earnings of $037 a share.
Same-store sales were up 5 percent and grow margins grew from 54.8 percent to 58.5 percent, an increase of 370 basis points.
EPS for full year 2010 was increased from a range of $2.60 to $2.65 to a range of $2.72 to $2.77.
Goldman said they "think the shares may find some support given the solid top-line results and much better than expected gross margins. However, with both sales and margin comparisons getting tougher in 2011, we are likely to see a slowing EPS growth trajectory."
Net income in the quarter for Tiffany rose to $55.1 million, or $0.43 a share, a gain of 27 percent over the $43.3 million generated last year in the same quarter.
Revenue for the quarter was up 14 percent, coming in at $681.73 million, up from last year's $598.21 million.
Analysts had been looking for revenue of $652.8 million, and earnings of $037 a share.
Same-store sales were up 5 percent and grow margins grew from 54.8 percent to 58.5 percent, an increase of 370 basis points.
EPS for full year 2010 was increased from a range of $2.60 to $2.65 to a range of $2.72 to $2.77.
Fred's (NASDAQ:FRED) Needs to Prove Turnaround Says Wedbush
Fred's Inc. (NASDAQ:FRED) needs to prove they've turned the quarter, and it should be accomplished during this Christmas season says Wedbush.
Wedbush reiterated their "Underperform" rating on the retailer until they are able to do that.
Earnings estimates for full year 2011 are $0.90.
Fred's has been trading at right aroung the $13 price target Wedbush has on them, which was increased from $12 a share.
Wedbush reiterated their "Underperform" rating on the retailer until they are able to do that.
Earnings estimates for full year 2011 are $0.90.
Fred's has been trading at right aroung the $13 price target Wedbush has on them, which was increased from $12 a share.
Central Garden & Pet Co. (NASDAQ:CENT) Outlook Cloudy
Central Garden & Pet Co. (NASDAQ:CENT) has added a number of products to their line, and changed pricing, but according to Jefferies, which maintain a "Hold" rating on the retailer, there needs to be more visibility as to the results of those investments to know what the sales growth will be going forward.
Jefferies said, "While new products, brand investments, and pricing could all help the top line, we currently look for only modest sales growth as we await better visibility into the success of these initiatives."
EPS estimates for full year 2011 were lowered to $0.90 from $1.05. Revenue estimates for full year 2011 were lowered to $1.5 billion from $1.6 billion. EPS and revenue estimates for full year 2012 are $1.00 and $1.6 billion.
Jefferies said, "While new products, brand investments, and pricing could all help the top line, we currently look for only modest sales growth as we await better visibility into the success of these initiatives."
EPS estimates for full year 2011 were lowered to $0.90 from $1.05. Revenue estimates for full year 2011 were lowered to $1.5 billion from $1.6 billion. EPS and revenue estimates for full year 2012 are $1.00 and $1.6 billion.
Children's Place (NASDAQ:PLCE) Accelerating Expansion in 2011
With 85 new physical stores to open in 2011, and a growing and robust Internet business, The Children's Place (NASDAQ:PLCE) should enjoy accelerated growth in 2011.
Susquehanna maintained their "Neutral" rating on the retailer for now, while incrased their EPS estimate and price target.
Susquehanna noted, "Plans call for 85 store openings in 2011, with the majority to be located in value centers. E-commerce continues to experience strong growth, with revenues up 33% in 3Q10, and strength across all key metrics including traffic, transactions, ADS and AUR. A "Place Shops" section has been added to the upgraded web site, offering customers ease of shopability in a new gift, special occasion, sleepwear and uniform shops. The web site will begin shipping internationally in 4Q10."
EPS estimates for full year 2011 were raised to to $2.83 from $2.71 and to $3.10 from $2.98 for full year 2012.
They also had their price target raised on them from $41 to $47, although they've been trading above $51 a share recently.
Susquehanna maintained their "Neutral" rating on the retailer for now, while incrased their EPS estimate and price target.
Susquehanna noted, "Plans call for 85 store openings in 2011, with the majority to be located in value centers. E-commerce continues to experience strong growth, with revenues up 33% in 3Q10, and strength across all key metrics including traffic, transactions, ADS and AUR. A "Place Shops" section has been added to the upgraded web site, offering customers ease of shopability in a new gift, special occasion, sleepwear and uniform shops. The web site will begin shipping internationally in 4Q10."
EPS estimates for full year 2011 were raised to to $2.83 from $2.71 and to $3.10 from $2.98 for full year 2012.
They also had their price target raised on them from $41 to $47, although they've been trading above $51 a share recently.
Summer Infant (NASDAQ:SUMR) Should Do Okay After Resignation of EVP
Even though Summer Infant's (NASDAQ:SUMR) EVP of Product Development, Steve Gibree, has left the company, Needham believe the solid organizational structure of the company and CEOs background should make it less of a disruption than it could have been.
Needham said, "Mr. Steve Gibree, SUMR's EVP of Product Development, has left the company. While Mr. Gibree played a major role in the SUMR's growth in recent years, and is clearly one of SUMR's top executives (and shareholders), we believe SUMR's organizational structure, the depth of its talent pool, and the background of its CEO will prevent this move from causing significant disruption. We find the valuation of SUMR's shares to be compelling, and would view any weakness that might be related to this announcement as a buying opportunity."
A price target of $12 has been placed on Summer Infant by Needham & Company.
Needham said, "Mr. Steve Gibree, SUMR's EVP of Product Development, has left the company. While Mr. Gibree played a major role in the SUMR's growth in recent years, and is clearly one of SUMR's top executives (and shareholders), we believe SUMR's organizational structure, the depth of its talent pool, and the background of its CEO will prevent this move from causing significant disruption. We find the valuation of SUMR's shares to be compelling, and would view any weakness that might be related to this announcement as a buying opportunity."
A price target of $12 has been placed on Summer Infant by Needham & Company.
Brown Shoe (NYSE:BWS) Could Use Stronger Profitability in Core Business
Susquehanna maintains their "Neutral" rating on Brown Shoe Co. (NYSE:BWS), while also raising their earnings and price target estimates.
Even so, to improve their rating Susquehanna said they would need to see better profits in their core business.
"Solid FY10 guidance with FY11 EPS of $1.31-$1.43 vs. consensus of $1.14, with most of the delta from non-recurrence of one-time step-up in incentive compensation and anomalous freight costs. We would like to see greater improvement in the profitability of the core businesses, given that FY10 operating margins remain 170 bps below pre-recession level," said Susquehanna.
EPS estimates for full year 2010 were raised to $0.92 from $0.85 and to $1.35 from $1.05 for full year 2011.
Susquehanna has a price target of $16 on them, raising it from $13.
Even so, to improve their rating Susquehanna said they would need to see better profits in their core business.
"Solid FY10 guidance with FY11 EPS of $1.31-$1.43 vs. consensus of $1.14, with most of the delta from non-recurrence of one-time step-up in incentive compensation and anomalous freight costs. We would like to see greater improvement in the profitability of the core businesses, given that FY10 operating margins remain 170 bps below pre-recession level," said Susquehanna.
EPS estimates for full year 2010 were raised to $0.92 from $0.85 and to $1.35 from $1.05 for full year 2011.
Susquehanna has a price target of $16 on them, raising it from $13.
Needham Maintains "Strong Buy" Guess (NYSE:GES) on Fundamentals
Needham & Company reiterated their "Strong Buy" on Guess (NYSE:GES) based on strong fundamentals.
Needham said, "Fashion right product and lean inventories have resulted in less promotional activity than LY which has been selectively utilized to draw traffic and increase conversion. At -13x our FY11 EPS estimate of $3.61, GES is trading at a discount to the sector average of -15x and a discount to its long term organic growth rate of 15% to 20% and 5 year historical P/E of -24x. We expect long term growth should be fueled by International opportunities, Licensing, and +DD U.S. retail square footage growth. Thus, we think GES should trade at least inline with the lower end of its organic growth rate of 15% to 20% and believe that fair market value for GES is at least 16x our FY11 EPS."
A price target of $59 is held by Needham on the retailer.
Needham said, "Fashion right product and lean inventories have resulted in less promotional activity than LY which has been selectively utilized to draw traffic and increase conversion. At -13x our FY11 EPS estimate of $3.61, GES is trading at a discount to the sector average of -15x and a discount to its long term organic growth rate of 15% to 20% and 5 year historical P/E of -24x. We expect long term growth should be fueled by International opportunities, Licensing, and +DD U.S. retail square footage growth. Thus, we think GES should trade at least inline with the lower end of its organic growth rate of 15% to 20% and believe that fair market value for GES is at least 16x our FY11 EPS."
A price target of $59 is held by Needham on the retailer.
Trading Tips on Apple (Nasdaq:AAPL), Broadcom (Nasdaq:BRCM), QUALCOMM (Nasdaq:QCOM), Linear (Nasdaq:LLTC)
Apple (Nasdaq:AAPL) Broadcom (Nasdaq:BRCM) QUALCOMM (Nasdaq:QCOM) Linear Technology (Nasdaq:LLTC) were the recipients of a quick overview from FBR Capital.
Here's what FBR had to say about them all:
"We have updated checks into the Apple supply chain that we discuss below, as well as implications for covered stocks Broadcom, QUALCOMM, and Linear Technology. In short, 4Q supply and production constraints are limiting upside, pushing some of that production into calendar 1Q'11, thus dampening both 4Q'10 upside and 1Q'11 seasonal downside (actually, we expect this year 1Q'11 production will grow for both iPhones and iPads!).
"For Broadcom, the firm's revenues should benefit by roughly one point sequentially in both 4Q'10 and 1Q'11 due to increased iPhone and iPad builds. Despite this, we wonder if a lack of 4Q production upside will limit upside to Broadcom's stock near-term.
"For Qualcomm, our contacts continue to believe that Qualcomm will likely replace Intel (Nasdaq:INTC)/Infineon's (NYSE:IFX) baseband solution beginning in mid-2011 with an integrated CDMA/WCDMA baseband solution that will allow Apple to address more carriers without changing the phone's hardware specifications. Qualcomm's annual EPS could benefit by as much as $0.35 if it supplies into all iPhones and iPads.
"Finally, for Linear Technology, we are somewhat concerned that the firm could cease participating in the iPad beginning in early- to mid-2011, though we do not have any firm evidence of this in hand, nor have our contacts been able to confirm this. We simply note that given Linear's roughly 50% operating margins, Apple may not want to spend $100M on a DC/DC converter and another power management chip for the iPad in 2011 (40M units at $2-$3 of content each). Given that Linear should see roughly $20M of revenue contribution from the iPad in both calendar 4Q'10 and 1Q'11, or roughly 6% of revenues, and given that the automotive and industrial sectors are likely shipping chips at above end-consumption rates, we think some near-term risks exist for shares of LLTC."
Apple closed Wednesday at $314.80, gaining $6.07, or 1.96 percent. Broadcom closed at $45.25, increasing by $1.32, or 3.01 percent. Qualcomm ended the trading day on Wednesday at $48.07, rising by $0.97, or 2.06 percent. Linear Technology closed Wednesday at $33.71, gaining $0.76, or 2.34 percent.
Here's what FBR had to say about them all:
"We have updated checks into the Apple supply chain that we discuss below, as well as implications for covered stocks Broadcom, QUALCOMM, and Linear Technology. In short, 4Q supply and production constraints are limiting upside, pushing some of that production into calendar 1Q'11, thus dampening both 4Q'10 upside and 1Q'11 seasonal downside (actually, we expect this year 1Q'11 production will grow for both iPhones and iPads!).
"For Broadcom, the firm's revenues should benefit by roughly one point sequentially in both 4Q'10 and 1Q'11 due to increased iPhone and iPad builds. Despite this, we wonder if a lack of 4Q production upside will limit upside to Broadcom's stock near-term.
"For Qualcomm, our contacts continue to believe that Qualcomm will likely replace Intel (Nasdaq:INTC)/Infineon's (NYSE:IFX) baseband solution beginning in mid-2011 with an integrated CDMA/WCDMA baseband solution that will allow Apple to address more carriers without changing the phone's hardware specifications. Qualcomm's annual EPS could benefit by as much as $0.35 if it supplies into all iPhones and iPads.
"Finally, for Linear Technology, we are somewhat concerned that the firm could cease participating in the iPad beginning in early- to mid-2011, though we do not have any firm evidence of this in hand, nor have our contacts been able to confirm this. We simply note that given Linear's roughly 50% operating margins, Apple may not want to spend $100M on a DC/DC converter and another power management chip for the iPad in 2011 (40M units at $2-$3 of content each). Given that Linear should see roughly $20M of revenue contribution from the iPad in both calendar 4Q'10 and 1Q'11, or roughly 6% of revenues, and given that the automotive and industrial sectors are likely shipping chips at above end-consumption rates, we think some near-term risks exist for shares of LLTC."
Apple closed Wednesday at $314.80, gaining $6.07, or 1.96 percent. Broadcom closed at $45.25, increasing by $1.32, or 3.01 percent. Qualcomm ended the trading day on Wednesday at $48.07, rising by $0.97, or 2.06 percent. Linear Technology closed Wednesday at $33.71, gaining $0.76, or 2.34 percent.
LTX-Credence (NASDAQ:LTXC) Optimistic on ASLx Tests
With the probability that LTX-Credence will merge with Verigy (Nasdaq:VRGY), Needham & Company said they see no reason to invest in LTXC at this time. They maintain their "Hold" rating on LTX.
LTX-Credence said they're high on the beta test of the ASLx, which is due to ship in the first quarter of January.
Needham said, "...Management was optimistic on its beta test of the ASLx, due to ship in JanQ1. We note that Verigy (VRGY, U/R) reported OctQ4 revenue/EPS of $159M/$0.29 vs. consensus of $164M/$0.28. VRGY's soft JanQ1 guide was $118M/($0.01) at the midpoint compared to consensus of $145M/$0.17. We lowered our FY2011 revenue/EPS from $304M/$1.43 to $263M/$1.05 and our FY2012 revenue/EPS from $295M/$1.25 to $276M/$1.15. Due to the likely merger with Verigy, we maintain that LTXC shares are bound to the performance of VRGY shares and as such believe there is no urgency to get involved in LTXC shares near-term."
LTX closed Wednesday at $8.11, gaining $0.26, or 3.31 percent. Volume was three times the 3-month daily average.
LTX-Credence said they're high on the beta test of the ASLx, which is due to ship in the first quarter of January.
Needham said, "...Management was optimistic on its beta test of the ASLx, due to ship in JanQ1. We note that Verigy (VRGY, U/R) reported OctQ4 revenue/EPS of $159M/$0.29 vs. consensus of $164M/$0.28. VRGY's soft JanQ1 guide was $118M/($0.01) at the midpoint compared to consensus of $145M/$0.17. We lowered our FY2011 revenue/EPS from $304M/$1.43 to $263M/$1.05 and our FY2012 revenue/EPS from $295M/$1.25 to $276M/$1.15. Due to the likely merger with Verigy, we maintain that LTXC shares are bound to the performance of VRGY shares and as such believe there is no urgency to get involved in LTXC shares near-term."
LTX closed Wednesday at $8.11, gaining $0.26, or 3.31 percent. Volume was three times the 3-month daily average.
Wednesday, November 24, 2010
Barrick (NYSE:ABX), Yamana (NYSE:AUY), Agnico (NYSE:AEM), Kinross (NYSE:KGC) Trading Up Today
Gold miners were mixed today, as gold prices today, while remaining somewhat level, weren't inspiring on the day, and most gold mining stocks were flirting just above or beneath gains or losses. Barrick (NYSE:ABX), Yamana (NYSE:AUY), Agnico (NYSE:AEM) and Kinross (NYSE:KGC) were all trading in positive territory, but some were just barely hanging on.
The usual concerns over China, EU sovereign debt, quantitative easing and geopolitical events remain part of the equation, but it seems they are on the back burner before the Thanksgiving weekend in America and the official launch of the Christmas shopping season.
Kinross was trading at $18.09, gaining $0.09, or 0.50 percent at 1:39 PM EST. Agnico was at $79.18, rising by $0.76, or 0.97 percent. Yamana was slightly up, coming in at $11.39, increasing $0.04, or 0.35 percent. Barrick was up to $50.87, increasing by $0.05, or 0.10 percent.
The usual concerns over China, EU sovereign debt, quantitative easing and geopolitical events remain part of the equation, but it seems they are on the back burner before the Thanksgiving weekend in America and the official launch of the Christmas shopping season.
Kinross was trading at $18.09, gaining $0.09, or 0.50 percent at 1:39 PM EST. Agnico was at $79.18, rising by $0.76, or 0.97 percent. Yamana was slightly up, coming in at $11.39, increasing $0.04, or 0.35 percent. Barrick was up to $50.87, increasing by $0.05, or 0.10 percent.
Amazon (Nasdaq:AMZN), Wal-Mart (NYSE:WMT) Offering Best Shipping Deals
Consumers will be the big winners this Christmas season as retailers compete for their dollars by offering free shipping, with Wal-Mart (NYSE:WMT) and Amazon (Nasdaq:AMZN) unsurprisingly leading the way.
Wal-Mart was the first retailer to strike, saying they would offer free shipping on about 60,000 items. Contrary to some competitors, they offer it with no minimum purchase.
Amazon quickly responded to the Wal-Mart challenge by saying they'll match or beat and free shipping offer, and will include free returns for a period of 30 days.
Best Buy (NYSE:BBY) is competing strongly next in line for shipping, but they don't include some of the more popular gifts, such as the Apple (NASDAQ:AAPL) iPad. Their promotion runs until December 21.
Barnes & Noble (NYSE:BKS) is offering free shipping only on Cyber Monday.
While Target (NYSE:TGT) is competing in free shipping, they require a $50 minimum, and are only running it through December 11. Gap (NYSE:GPS) also requires a minimum acquisition of $50 to get the free shipping.
Penney's (NYSE:JCP) will provide free shipping from November 24 through November 30 on orders of $25 or more.
For the first time in their history, Macy's (NYSE:M) will offer free shipping, although customers must order $99 online in order to qualify for it. They're running their free shipping through December 20.
All the retailers mentioned in the article are up in trading today.
Wal-Mart was the first retailer to strike, saying they would offer free shipping on about 60,000 items. Contrary to some competitors, they offer it with no minimum purchase.
Amazon quickly responded to the Wal-Mart challenge by saying they'll match or beat and free shipping offer, and will include free returns for a period of 30 days.
Best Buy (NYSE:BBY) is competing strongly next in line for shipping, but they don't include some of the more popular gifts, such as the Apple (NASDAQ:AAPL) iPad. Their promotion runs until December 21.
Barnes & Noble (NYSE:BKS) is offering free shipping only on Cyber Monday.
While Target (NYSE:TGT) is competing in free shipping, they require a $50 minimum, and are only running it through December 11. Gap (NYSE:GPS) also requires a minimum acquisition of $50 to get the free shipping.
Penney's (NYSE:JCP) will provide free shipping from November 24 through November 30 on orders of $25 or more.
For the first time in their history, Macy's (NYSE:M) will offer free shipping, although customers must order $99 online in order to qualify for it. They're running their free shipping through December 20.
All the retailers mentioned in the article are up in trading today.
Trina Solar (NYSE:TSL) Manufacturing Model Driving Profitability
Auriga says they're maintaining their "Buy" rating on Trina Solar (NYSE:TSL), citing their low cost manufacturing model, which generates above-average profits.
Auriga said, "Trina Solar is set to report solid results next Tuesday, Nov 30, before the market opens. While our model changes have been slow to materialize, we find the Street is lagging as well. We are forecasting over $1.00 in EPS in both Q3 and Q4, and have raised our estimates substantially in 2011. To finish 2010, we believe that Trina has been selling into a robust market allowing for ASP increases and higher volumes, while the start of 2011 should not be as bearish as the Street estimates portray. While most solar stocks are viewed as trading vehicles, we regard Trina Solar as an investable idea. Trina's low cost integrated manufacturing model produces a highly bankable product, which delivers above-average profitability. In addition, Trina's management team carries a high degree of credibility and allows for greater transparency and visibility into the business."
Trina was trading at $24.26, gaining $0.90, or 3.85 percent at 12:50 PM EST. Auriga has a price target of $38 on them.
Auriga said, "Trina Solar is set to report solid results next Tuesday, Nov 30, before the market opens. While our model changes have been slow to materialize, we find the Street is lagging as well. We are forecasting over $1.00 in EPS in both Q3 and Q4, and have raised our estimates substantially in 2011. To finish 2010, we believe that Trina has been selling into a robust market allowing for ASP increases and higher volumes, while the start of 2011 should not be as bearish as the Street estimates portray. While most solar stocks are viewed as trading vehicles, we regard Trina Solar as an investable idea. Trina's low cost integrated manufacturing model produces a highly bankable product, which delivers above-average profitability. In addition, Trina's management team carries a high degree of credibility and allows for greater transparency and visibility into the business."
Trina was trading at $24.26, gaining $0.90, or 3.85 percent at 12:50 PM EST. Auriga has a price target of $38 on them.
Noble (NYSE:NE) Should Outperform Peers in Short Term Says FBR
Based on the narrowing of bifurcation rates, FBR said they see Noble Corporation (NYSE:NE) outperforming their peers over the next month or so.
FBR said, "We are adding NE to FBR Top Picks, replacing FMC Technologies (NYSE:FTI). We expect the stock to outperform its peers in the next several weeks, based on our expectation for the bifurcation of rates to narrow as the jackup market builds momentum and lower-quality rigs go back to work. We also believe the overreaction to Noble's November fleet status report provides an attractive entry point for NE. Lastly, Noble has a strong backlog and ample liquidity to grow even after adding four modern deepwater units in the Bully and Globetrotter rigs."
FBR maintains their "Outperform" rating on Noble, also adding them to their Top Picks List.
Noble was trading today at $35.08, gaining $0.22, or 0.63 percent as of 12:29 PM EST. FBR has a price target of $45 on them raising it from $42.
FBR said, "We are adding NE to FBR Top Picks, replacing FMC Technologies (NYSE:FTI). We expect the stock to outperform its peers in the next several weeks, based on our expectation for the bifurcation of rates to narrow as the jackup market builds momentum and lower-quality rigs go back to work. We also believe the overreaction to Noble's November fleet status report provides an attractive entry point for NE. Lastly, Noble has a strong backlog and ample liquidity to grow even after adding four modern deepwater units in the Bully and Globetrotter rigs."
FBR maintains their "Outperform" rating on Noble, also adding them to their Top Picks List.
Noble was trading today at $35.08, gaining $0.22, or 0.63 percent as of 12:29 PM EST. FBR has a price target of $45 on them raising it from $42.
Citigroup (NYSE:C) Says First Solar's (NASDAQ:FSLR) 230MW AV Solar Ranch One Approval Has Risks
After digesting the announcement by First Solar (NASDAQ:FSLR) that they were granted approval for their 230MW AV Solar Ranch One (AVSRO) project by the LA County Board of Supervisors, Citigroup (NYSE:C) said it won't be material for estimates in 2011, and retains some risks.
Citigroup said, “As the Street becomes suddenly concerned about long-evident supply issues, we are starting to take the opposite view especially with respect to FSLR. In short, we think 2011 EPS guidance will bracket the low to mid $8.00 range, but our confidence in this number is very high especially relative to Chinese solar names where pricing is a much bigger question mark.
"Thus, we think FSLR should start to outperform its Chinese peers and the stock should start to become a bastion of safety in 2011 as estimate risk among peers is increasingly evident.”
The approval was in connection to a complaint from Northrop Grumman (NYSE:NOC) that it may interfere with their radar testing facility in the area.
First Solar was trading at $126.00, rising by $1.80, or 1.45 percent as of 12:17 PM EST.
Citigroup said, “As the Street becomes suddenly concerned about long-evident supply issues, we are starting to take the opposite view especially with respect to FSLR. In short, we think 2011 EPS guidance will bracket the low to mid $8.00 range, but our confidence in this number is very high especially relative to Chinese solar names where pricing is a much bigger question mark.
"Thus, we think FSLR should start to outperform its Chinese peers and the stock should start to become a bastion of safety in 2011 as estimate risk among peers is increasingly evident.”
The approval was in connection to a complaint from Northrop Grumman (NYSE:NOC) that it may interfere with their radar testing facility in the area.
First Solar was trading at $126.00, rising by $1.80, or 1.45 percent as of 12:17 PM EST.
Amazon (Nasdaq:AMZN) Soars on Citigroup (NYSE:C) Price Target, "Buy" Rating
Amazon.com (Nasdaq:AMZN) is soaring today in anticipation of a big Christmas season and the reiteration by Citigroup (NYSE:C) analyst Mark Mahaney of a "Buy" rating on the online retailer.
One of the major catalysts was the “Hot 20 toys” survey which included Amazon and major competitors Wal-Mart (NYSE:WMT) and Target (NYSE:TGT). Findings were when shipping was included for the hottest toys, Amazon was the pricing leader, and also the only one offering every one of the toys on the list.
In another survey, 12 percent of respondents said they were going to acquire a e-reader device of some type this Christmas, suggesting the estimate made by Mahaney that 8 million kindles would be sold this holiday season may be to conservative.
Amason was trading at $176.71, gaining $8.51, or 5.06 percent at 12:04 PM EST. Citigroup has a price target of $190 on them.
One of the major catalysts was the “Hot 20 toys” survey which included Amazon and major competitors Wal-Mart (NYSE:WMT) and Target (NYSE:TGT). Findings were when shipping was included for the hottest toys, Amazon was the pricing leader, and also the only one offering every one of the toys on the list.
In another survey, 12 percent of respondents said they were going to acquire a e-reader device of some type this Christmas, suggesting the estimate made by Mahaney that 8 million kindles would be sold this holiday season may be to conservative.
Amason was trading at $176.71, gaining $8.51, or 5.06 percent at 12:04 PM EST. Citigroup has a price target of $190 on them.
Regeneron Pharma's (NASDAQ:REGN) VEGF Trap-Eye Solution Works!
After two late-stage tests on Regeneron Pharma's (NASDAQ:REGN) and Bayer's VEGF Trap-Eye solution were successfully completed, the results were it worked as good as Roche’s ranibizumab (Lucentis), which they are sure to take market share away from when it hits the market.
Canaccord said, "Regeneron spiked early Monday after the drug developer and partner Bayer AG said their potential injectable treatment for the eye disease wet age-related macular degeneration worked as well as Roche’s ranibizumab (Lucentis) in two late-stage studies. The companies are developing the VEGF Trap-Eye solution as a treatment for the disease, which results in vision loss as new blood vessels grow beneath the retina and leak blood and fluid, damaging the retina and distorting vision. The condition, which can progress to blindness, usually affects older adults. Analysts at Brean Murray note that giving VEGF Trap Eye every two months was at least as good as monthly 0.5 mg ranibizumab, which halves the number of undesirable intraocular injections. Patient vision generally suffers as one tries to minimize their number of eye injections by seeking therapy only when they deem their visual acuity to be low. Therefore, a less frequent therapy that is at least as effective as ranibizumab is
extremely desirable and should garner significant market share."
Regeneron closed Tuesday at $29.99, rising by $0.46, or 1.56 percent.
Canaccord said, "Regeneron spiked early Monday after the drug developer and partner Bayer AG said their potential injectable treatment for the eye disease wet age-related macular degeneration worked as well as Roche’s ranibizumab (Lucentis) in two late-stage studies. The companies are developing the VEGF Trap-Eye solution as a treatment for the disease, which results in vision loss as new blood vessels grow beneath the retina and leak blood and fluid, damaging the retina and distorting vision. The condition, which can progress to blindness, usually affects older adults. Analysts at Brean Murray note that giving VEGF Trap Eye every two months was at least as good as monthly 0.5 mg ranibizumab, which halves the number of undesirable intraocular injections. Patient vision generally suffers as one tries to minimize their number of eye injections by seeking therapy only when they deem their visual acuity to be low. Therefore, a less frequent therapy that is at least as effective as ranibizumab is
extremely desirable and should garner significant market share."
Regeneron closed Tuesday at $29.99, rising by $0.46, or 1.56 percent.
TriMas (NASDAQ:TRS) Struggling to Grow Earnings
While TriMas Corp. (NASDAQ:TRS) seems to be okay for earnings to grow through 2011, Jefferies has concerns that after that they'll struggle to has sustainable earnings.
Jefferies said, "We are concerned over the sustainability of earnings growth after 2011. We believe there are resources deployed in too many businesses. Longer-term sales opportunities appear limited in businesses which account for about 50% of sales. We believe TRS will need to spend much of its cost savings to drive sales growth in its niche markets."
EPS and revenue estimates for full year 2010 were raised to $1.14/$941.9 million from $1.07/$926.1 million and to $1.38/$1 billion from $1.30/$972 million for full year 2011.
TriMas closed Tuesday at $19.03, gaining $0.34, or 1.82 percent. Jefferies, which maintains a "Hold" on TriMas, increased their price target from $14 to $20.
Jefferies said, "We are concerned over the sustainability of earnings growth after 2011. We believe there are resources deployed in too many businesses. Longer-term sales opportunities appear limited in businesses which account for about 50% of sales. We believe TRS will need to spend much of its cost savings to drive sales growth in its niche markets."
EPS and revenue estimates for full year 2010 were raised to $1.14/$941.9 million from $1.07/$926.1 million and to $1.38/$1 billion from $1.30/$972 million for full year 2011.
TriMas closed Tuesday at $19.03, gaining $0.34, or 1.82 percent. Jefferies, which maintains a "Hold" on TriMas, increased their price target from $14 to $20.
Harsco (NYSE:HSC) End Markets Show No Signs of Growth
Construction markets in Harsco Corporation (NYSE:HSC) territories are anemic, and that will push margins and growth down going forward, with no end in view as to when growth will resume.
Jefferies said, "HSC has been reporting losses in Infrastructure, the flagship business, this year and we expect another loss in 4Q. Its primary markets are NA and Europe commercial construction, where we estimate spending is declining 10%-15%. Pricing is weak."
Although maintaining their "Buy" rating and increasing their price target, Jefferies lowered their EPS estimate in full year 2010 and 2011.
They dropped their EPS estimates for full year 2010 to $0.82 from $0.86 and to $1.42 from $1.45 for full year 2011. They place a EPS estimate of $1.92 for full year 2012. Revenue estimates were also lowered a little each year, as full year 2010 went from $3.04 billion to $3.00 billion and for full year 2011 they went from $3.2 billion to $3.1 billion. The full year 2012 revenues estimate is $3.224 billion.
Harsco closed Tuesday at $23.04, falling $0.30, or 1.29 percent. Jefferies increased their price target on Harsco from $32 to $35.
Jefferies said, "HSC has been reporting losses in Infrastructure, the flagship business, this year and we expect another loss in 4Q. Its primary markets are NA and Europe commercial construction, where we estimate spending is declining 10%-15%. Pricing is weak."
Although maintaining their "Buy" rating and increasing their price target, Jefferies lowered their EPS estimate in full year 2010 and 2011.
They dropped their EPS estimates for full year 2010 to $0.82 from $0.86 and to $1.42 from $1.45 for full year 2011. They place a EPS estimate of $1.92 for full year 2012. Revenue estimates were also lowered a little each year, as full year 2010 went from $3.04 billion to $3.00 billion and for full year 2011 they went from $3.2 billion to $3.1 billion. The full year 2012 revenues estimate is $3.224 billion.
Harsco closed Tuesday at $23.04, falling $0.30, or 1.29 percent. Jefferies increased their price target on Harsco from $32 to $35.
Execution is Key MF Global's (NYSE:MF) Growth Goals
While the goal for MF Global (NYSE:MF) to generate double-digit growth by the middle of 2012 appears to have potential, they must execute it if they're going to meet their target.
Ticonderoga said, "Recently, we sat down with MF CEO Jon Corzine. We walked out of the meeting more confident in the company's strategic direction and the ability of MF to meaningfully improve profitability moving forward. Management's goal of double-digit returns in 4-6 qrts., which is mid-2012, appears doable, providing the company executes. So far, we believe that MF is executing well, showing visibly improving compensation ratios and growing client balances, giving us confidence that our street-high 2012 estimate of $0.79 (with a 12% ROE, a 15% ROE would push EPS > $1.00) is doable and could be conservative...Principal trading rollout just getting started...Client balance growth raises capital questions, but represents positive earnings growth...After factoring in capital costs, we estimate every $1b in client credit balances generates -$9m in net revenues before we even consider associated trading volumes and commissions (or a higher rate cycle)."
MF Global closed at $7.69 Tuesday, falling $0.38, or $4.71 percent. Ticonderoga has a price target on the brokerage firm of $10.50 a share. They maintain their "Buy" rating on them.
Ticonderoga said, "Recently, we sat down with MF CEO Jon Corzine. We walked out of the meeting more confident in the company's strategic direction and the ability of MF to meaningfully improve profitability moving forward. Management's goal of double-digit returns in 4-6 qrts., which is mid-2012, appears doable, providing the company executes. So far, we believe that MF is executing well, showing visibly improving compensation ratios and growing client balances, giving us confidence that our street-high 2012 estimate of $0.79 (with a 12% ROE, a 15% ROE would push EPS > $1.00) is doable and could be conservative...Principal trading rollout just getting started...Client balance growth raises capital questions, but represents positive earnings growth...After factoring in capital costs, we estimate every $1b in client credit balances generates -$9m in net revenues before we even consider associated trading volumes and commissions (or a higher rate cycle)."
MF Global closed at $7.69 Tuesday, falling $0.38, or $4.71 percent. Ticonderoga has a price target on the brokerage firm of $10.50 a share. They maintain their "Buy" rating on them.
HP (NYSE:HPQ), Cisco (Nasdaq:CSCO), Dell (Nasdaq:DELL), Brocade (Nasdaq:BRCD) Outlook Weak in Short Term
HP (NYSE:HPQ), Cisco (Nasdaq:CSCO), Dell (Nasdaq:DELL), Brocade (Nasdaq:BRCD) have all given weak guidance heading into January, according to Ticonderoga Securities, and they see less upside for the sector near term.
Ticonderoga said, "HP Upside Momentum Wanes, Brocade Provides Weak Outlook. Last night, HP reported better than expected October quarter results, but the revenue upside deteriorated compared with previous quarters, a common theme of late in the tech world. Also, Brocade reported a better than expected October quarter but a weaker than anticipated January quarter outlook. Over the past two weeks, Cisco, Dell and Brocade have provided weaker than expected January revenue outlooks, while NetApp (Nasdaq:NTAP) was in line and the upside at HP slowed.
"Upside Momentum at HP Slows. HP reported 4QFY10 revenue of $33.28 billion (up 8% Q/Q vs. up 12% average) that beat the Street estimate by -$524 million or approximately one half of the average upside delivered over the past year. Looking back at HP's revenue results during CY10, the company beat the Street sales estimate by -$1.2 billion in the January quarter, beat by -$1 billion in the April quarter and beat by -$700 million in the July quarter. Looking into 1QFY11, HP's revenue outlook calls for $32.8-$33.0 billion versus the consensus estimate of $32.7 billion.
"What Did BRCD, CSCO, DELL, HP and NTAP Tell Us? The slowing upside momentum at HP and NetApp, combined with disappointing outlooks from Cisco, Dell and Brocade tell us that the upside in the tech supply chain will become more difficult over the next few quarters. The January quarter sales outlooks for these five companies in aggregate totaled $60.47 billion, below the Street estimate of $61.94 billion by 2.4%, or $1.47 billion, highlighting deteriorating demand as we exit the year."
HP closed Tuesday at $44.19, gaining $0.94, or 2.17 percent. Cisco was at $19.20, falling $0.36, or 1.84 percent. Dell ended the session at $13.82, losing $0.14, or 1 percent. Brocade closed down at $5.13, dropping $0.57, or 10 percent. NetApp was at $50.85, falling by $1.37, or 2.62 percent.
Ticonderoga said, "HP Upside Momentum Wanes, Brocade Provides Weak Outlook. Last night, HP reported better than expected October quarter results, but the revenue upside deteriorated compared with previous quarters, a common theme of late in the tech world. Also, Brocade reported a better than expected October quarter but a weaker than anticipated January quarter outlook. Over the past two weeks, Cisco, Dell and Brocade have provided weaker than expected January revenue outlooks, while NetApp (Nasdaq:NTAP) was in line and the upside at HP slowed.
"Upside Momentum at HP Slows. HP reported 4QFY10 revenue of $33.28 billion (up 8% Q/Q vs. up 12% average) that beat the Street estimate by -$524 million or approximately one half of the average upside delivered over the past year. Looking back at HP's revenue results during CY10, the company beat the Street sales estimate by -$1.2 billion in the January quarter, beat by -$1 billion in the April quarter and beat by -$700 million in the July quarter. Looking into 1QFY11, HP's revenue outlook calls for $32.8-$33.0 billion versus the consensus estimate of $32.7 billion.
"What Did BRCD, CSCO, DELL, HP and NTAP Tell Us? The slowing upside momentum at HP and NetApp, combined with disappointing outlooks from Cisco, Dell and Brocade tell us that the upside in the tech supply chain will become more difficult over the next few quarters. The January quarter sales outlooks for these five companies in aggregate totaled $60.47 billion, below the Street estimate of $61.94 billion by 2.4%, or $1.47 billion, highlighting deteriorating demand as we exit the year."
HP closed Tuesday at $44.19, gaining $0.94, or 2.17 percent. Cisco was at $19.20, falling $0.36, or 1.84 percent. Dell ended the session at $13.82, losing $0.14, or 1 percent. Brocade closed down at $5.13, dropping $0.57, or 10 percent. NetApp was at $50.85, falling by $1.37, or 2.62 percent.
Advanced Battery (NASDAQ:ABAT) Margins Should Widen in Fourth Quarter
After figures from the third-quarter were released, it appears margins for Advanced Battery Technologies (NASDAQ:ABAT) are poised to rise in the fourth quarter and forward, as operating expenses were lowered at the company.
Olympia Capital Markets said, "We are lowering our operating expense expectations in light of the third quarter figures. On that basis, we are raising our EPS estimates for the fourth quarter from $0.12 to $0.16, for the full year 2010 from $0.44 to $0.53, and for full year 2011 from $0.52 to $0.60. We continue to believe the shares would be reasonably priced at 10 times estimated 2011 earnings plus its current cash position, now $1.06 per share."
A "Buy" rating is maintained on Advanced Battery by Olympia, which closed Tuesday at $4.02, falling $0.03, or 0.74 percent. Olympia has a price target of $7 on them raising it from $6 a share.
Olympia Capital Markets said, "We are lowering our operating expense expectations in light of the third quarter figures. On that basis, we are raising our EPS estimates for the fourth quarter from $0.12 to $0.16, for the full year 2010 from $0.44 to $0.53, and for full year 2011 from $0.52 to $0.60. We continue to believe the shares would be reasonably priced at 10 times estimated 2011 earnings plus its current cash position, now $1.06 per share."
A "Buy" rating is maintained on Advanced Battery by Olympia, which closed Tuesday at $4.02, falling $0.03, or 0.74 percent. Olympia has a price target of $7 on them raising it from $6 a share.
Netflix (NASDAQ:NFLX) Should Generate New Subscribers with Streaming
Now that Netflix (NASDAQ:NFLX) has seriously entered the streaming market, Needham & Company sees them generating new subscribers for the business, which shouldn't do much as far as cannibalization goes, although there is bound to be a small percentage involved.
Needham, which maintains a "Hold" rating on Netflix, said, "Netflix announced a streaming-only subscription plan and raised the prices on its combination by-mail and streaming plans. The streaming-only option should enable the company to add new subscribers who have no interest it its by-mail subscription plan. We continue with 2010 and 2011 estimates of $2.85 and $4.55 respectively. We also continue with a hold rating solely for valuation reasons."
Netflix closed Tuesday at $187.71, falling $0.61, or 0.32 percent. Trading volume was up over 30 percent on the day from its 3-month average.
Needham, which maintains a "Hold" rating on Netflix, said, "Netflix announced a streaming-only subscription plan and raised the prices on its combination by-mail and streaming plans. The streaming-only option should enable the company to add new subscribers who have no interest it its by-mail subscription plan. We continue with 2010 and 2011 estimates of $2.85 and $4.55 respectively. We also continue with a hold rating solely for valuation reasons."
Netflix closed Tuesday at $187.71, falling $0.61, or 0.32 percent. Trading volume was up over 30 percent on the day from its 3-month average.
Pacific Sunwear (NASDAQ:PSUN) Needs Wider Margins, Stronger Sales
Noting Pacific Sunwear of California (NASDAQ:PSUN) has improved their product line and store environment, Needham still sees them as weak until they can generate sustainably wider margins and consistent sales.
Needham, which maintains a "Hold" rating on Pacific, said, "At -0.4x P/sales and -1.6x P/book, respectively PSUN is trading significantly below the sector averages of 1.1x and 2.7x. While we agree both store environment and merchandise assortment has begun to improve at PacSun, the Junior’s business continues to struggle. We would like to see more evidence that a margin recovery is underway or stronger sales momentum, before we become more positive on the stock. We no longer think that liquidity is a concern, given the availability of credit and ability to generate cash, even on depressed sales levels."
Pacific closed Tuesday at $5.95, dropping $0.32, or 5.10 percent. Trading volume was almost double the 3-month daily average.
Needham, which maintains a "Hold" rating on Pacific, said, "At -0.4x P/sales and -1.6x P/book, respectively PSUN is trading significantly below the sector averages of 1.1x and 2.7x. While we agree both store environment and merchandise assortment has begun to improve at PacSun, the Junior’s business continues to struggle. We would like to see more evidence that a margin recovery is underway or stronger sales momentum, before we become more positive on the stock. We no longer think that liquidity is a concern, given the availability of credit and ability to generate cash, even on depressed sales levels."
Pacific closed Tuesday at $5.95, dropping $0.32, or 5.10 percent. Trading volume was almost double the 3-month daily average.
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