Submitted By Optiondragon
From Briefing.com
Periodicals Wrap-Up for Monday, July 21st
WALL STREET JOURNAL: People with the matter said that Ken Wilson, Goldman Sachs Group’s (GS) most senior financial-institutions broker, will temporarily exit the firm, the Wall Street Journal reported, in an effort to advise Treasury Secretary Henry Paulson on how to resolve the country’s banking crisis…FINANCIAL TIMES: The American Federation of State, County, and Municipal Employees, a union with a stake in Citigroup (C) called for the financial services company to break itself up. The Financial Times reported that the demand will almost definitely be rejected by Citigroup…NEW YORK TIMES: Treasury Secretary Henry Paulson’s plan for rescuing Fannie Mae (FNM) and Freddie Mac (FRE) calls for the creation of a new regulatory agency that would seek to assert more stringent control over the banks and lessen the damage they could cause to the American financial system, the New York Times reported…DAILY TELEGRAPH: The Daily Telegraph reported that BP (BP) blocked a $1.8B dividend payment to its Russian partners in the TNK-BP joint venture…PAIDCONTENT.ORG: According to paidContent.org, now that its cash on hand exceeds its market cap, speculation that Napster (NAPS) could be a takeover target heated up…
Weekly additions to the Investors Business Daily-100
The following are additions to the Investors Business Daily- 100 list for the week of July 18: Research In Motion (RIMM), New Oriental Education & Tech.(EDU), China Medical Tech (CMED), Colfax Corp. (CFX), Sadia SA (SDA), Activision Blizzard (ATVD), ABB Ltd, (ABB), Mindray Medical (MR), Valmont Industries (VMI), Amphenol Corp (APH), True Religion Apparel (TRLG), Gulfmark Offshore (GLF), Microsemi (MSCC), Cash America Intl. (CSH), Buenaventura Comp ADS (BVN), Cameron Intl. (CAM), Buckle Inc (BKE), HUB Group (HUBG), Ametek Inc. (AME), Cummins (CMI),Fluor (FLR), smith International (SII), Gulf Island Fabrication (GIFI)
Weekly subtractions from the Investor’s Business Daily-100
The following are subtractions from the Investors Business Daily-100 list for the week of July 18: Southwestern Energy (SWN), Hess Corp. (HES), Companhia Siderurgic (SID), Quicksilver Resources (KWK), Baytex Energy Trust (BTE), Berry Petroleum (BRY), Venoco (VQ), Arch Coal (ACI), Noble Energy (NBL), Occidental Petroleum (OXY), Cimarex Energy (XEC), Baidu.com (BIDU), Apple (AAPL), Core Laboratories (CLB), Encana Corporation (ECA), E O G Resources (EOG), Forest Oil (FST), Plains Exploration & Production (PXP), Helmerich & Payne (HP), Schnitzer Steel (SCHN), ITC Holdings (ITC), Monsanto (MON), Psychiatric Solutions (PSYS)
Alpha Natural had held talks with other bidders prior to deal-Financial Times
As reported in the Financial Times, Alpha Natural Resources (ANR) had held talks with other foreign concerns prior to its deal with Cleveland Cliffs (CLF), like ArcelorMittal (MT). according to dealReporter. Harbinger Capital Partners, Cleveland Cliffs largest shareholder is said to be unhappy with the deal and there are Alpha Natural shareholders who think they should have gotten more, leaving shareholder approval on both sides questionable.
HSBC shares gain on report about possible investment from Chinese firm-Telegraph
A report that China Investment Corporation is negotiating a possible investment in HSBC (HBC) sent HSBC’s shares up almost 4.2% today. The report originally appeared in the Telegraph. HSBC Chairman Stephen Green is understood to have met China Investment executives several times to discuss the matter in recent months.
Biogen Idec’s Tysabri sales expected to pass $1B in 2008-WSJ
Three years after it was recalled, Biogen Idec’s (BIIB) Tysabri, used to treat multiple sclerosis and Crohn’s disease, may now become a blockbuster seller, expected to pass $1B in sales this year, according to the Wall Street Journal. The recall in 2005 was because two people died from a brain infection, and patients are warned that the drug has a 1-in-1,000 risk of developing a related infection. The company reports second quarter results tomorrow.
Is the espresso drink expansion hurting McDonald’s?-WSJ
McDonald’s (MCD) aggressive expansion into the specialty coffee business–they want to add them to all of their 14,000 U.S. restaurants by sometime next year–may be hurting the company, which reports second quarter results on Wednesday, reports the Wall Street Journal. With Starbucks (SBUX) closing hundreds of stores nationwide, and the cost of ingredients and gasoline soaring, company data indicates sales are sluggish.
J.P. Morgan’s Dimon challenges validity of Tier 1 ratios-WSJ
The validity of investment bank’s capital ratios, under the direction of the SEC, are being challenged by J.P. Morgan Chase (JPM) CEO James Dimon. One reason is because the guidelines for commercial banks are different and are watched by the Federal Reserve, and that is seen as allowing banks to set their own capital requirements, according to the Wall Street Journal’s “Heard on the Street”. “It’s going to take a lot of structural fixes before there’s a meaningful reporting environment that gives credible, accurate and reliable information about capital to investors,” says Louisiana State University finance professor Joseph Mason, who adds, until there are changes: “Don’t trust any one ratio.”
ITC Holdings transmits electricity and sees its earnings surge-IBD
Formed in 2003 when it was divested from DTE Energy (DTE), ITC Holdings Corp. (ITC), a transmitter of electricity, went public in 2005 and has seen its earnings increase at a 94% five year growth rate and revenue at a 31% rate, according to Investor’s Business Daily’s “The New America”. For the first quarter, earnings jumped 36% to 53 cents a share, while revenue gained 40% to $141.9M. ITC has three subsidiaries, and owns 15,000 miles of high high-voltage electric transmission lines in Michigan and parts of Iowa, Minnesota, Illinois and Missouri. It customers are utilities, the independent power producers such as wind farms and others that provide electricity to consumers. The company is not a typical utility in that it transmits electricity at high voltages across long distances. Then it distributes it at lower voltages to homes and business. Acquisitions will also help it to grow. Analysts expect 2008 earnings to climb 17% to $1.96 a share, and then be up 14% in 2009 and 21% in 2010.
Yahoo-YHOO: Lowering below-Street estimates further@COWN
Cowen lowered its below-Street estimate further due to the deteriorating display advertising environment. The firm believes YHOO will report an inline Q2 report but views 2H08 Street estimates as too high. Shares are Neutral rated.
U.S. equity futures continue to point to a higher open
U.S. stock futures are still pointing to a higher open. This week starts one of the most heavily loaded weeks in terms of earnings reports for the June quarter. Most are hopeful that the existing positive tone on Wall Street will continue to lift stocks. Earnings so far seem to be “not as bad” as investors and analysts feared. The past week saw some of the biggest financial institutions, such as Citigroup (C) and Wells Fargo (WFC) post Q2 results that came in above Wall Street’s already lowered expectations. Investors this week turn to more earnings from the battered financials, with Bank of America (BAC) beating consensus estimates this morning and Wachovia (WB) scheduled to report earnings this morning, and with American Express (AXP) to report after the market close. Also, we will have a flurry of regional banks report throughout the week. Currently the indices are showing: S&P 500 futures rose 5.5 points to 1,265 and Nasdaq 100 futures added 8.2 points to 1,837. Dow industrial futures rose 34 points to 11,535.
SanDisk-SNDK: Expect to see higher share price after earnings@NEED
Needham believes shares are oversold at current levels and expects Q3 guidance to reflect sequential revenue growth, which they think is better than the lowered expectation. The firm lowered their target price to $23 from $38 but maintains a Buy rating on the stock.
BIIB upgraded to Buy from Underperform@MLCO
Merrill upgraded BIIB based on earnings growth, improved outlook for multiple sclerosis market, and its diversified mid to late-stage pipeline. Target $79
GOOG: Would buy stock more aggressively at these levels@GABE
After Google reported that its Q2 EPS declined slightly compared with Q1, Gabelli continues to believe that paid search advertising may be the most resilient among ad media to economic weakness. The firm believes that Google is facing mainly short-term concerns, and they think the company will weather the macro environment by gaining market share.
Northern Oil and Gas-NOG announces significant Bakken discoveries
Northern Oil and Gas has recently participated in the successful completion of three wells in the emerging North Dakota Bakken play, bringing to eleven the total number of producing wells in which Northern holds an interest. In addition, Northern holds a working interest in an additional fourteen wells that are in the drilling or completion stages and is included in nearly 70 permitted or docketed-for-permit drilling locations that are expected to drill between now and early 2009. Northern Oil controls approximately 60,000 net acres in the North Dakota Bakken play, yielding over 90 net well locations based on 640 acre drilling units. In addition, Northern controls approximately 22,000 net acres in Sheridan County, Montana and has successfully completed two wells to the Red River formation.
Elan Corp-ELN: An EDT divestiture would ba a financial plus@COWN
Cowen said their are reports that Elan may divest its Elan Drug Technologies division. The firm said the divestiture would be a financial positive as it would remove a significant debt overhang. Shares are Neutral rated.
Genentech-DNA: Expect higher bid by Roche, target to $95@BARD
Baird expects Roche to raise their $89 bid for DNA shares and recommends buying DNA into the low-to-mid $90s. The firm raised their price target to $95 from $87. Shares are Outperform rated.
Genentech-DNA: View Roche offer as too low@OPCO
Oppenheimer views Roche’s $89 per share offer for 44.1% of Genentech’s shares as too low. The firm believes Genentech has reached an inflection point. They think the company deserves a 25%-35% premium due to its successful launch of mBC, as well as the firm’s belief that the drug will successfully treat adjuvant CRC. Oppenheimer maintained their Outperform rating on Genentech.
Genentech-DNA: Believe $89/share offer undervalues pipeline@JPMS
JP Morgan believes the offer by Roche “substantially” undervalues DNA’s pipeline and would not be surprised to see the offer go higher. Shares remain Overweight rated.
CF Industries-CF estimates raised on strong near-term fundamentals@JPMS
JP Morgan raised their 2008 estimate to $14.75 from $11.50 to reflect strong near-term fundamentals in both Nitrogen and Phosphate. Shares remain Overweight rated.
Utilities Vulnerable to Takeovers@LYON
Calyon’s stock screen identified underperforming stocks relative to their peer group which help identify possible takeover candidates. The firm’s new screen added teh following names to the list: BKH, PNW, EE, AEE, CHG, ED, CPK, EDE, and LNT. The firm views BKH as an attractive investment but not necessarily a takeover candidate at this point.
Potash-POT estimates raised on recent price increases@JPMS
JP Morgan raised their 2009 estimate to $24.50 from $18.50 to reflect the potash price increases over the past few weeks. Shares remain Overweight rated.
Dry Bulk: Reiterate Overweight rating on the sector@BOFA
Banc of America notes that on Friday, the Argentina export tax issue was resolved after President Fernandez de Kirchner cancelled a farm export tax hike. The firm views this as positive for the Dry Bulk sector and highlights Navios Maritime (NM) as their top pick in the space.
Genentech-DNA upgraded to Overweight from Equal Weight@LEHM
Lehman upgraded DNA following Roche’s offer to acquire the rest of the company.
U.S. equity futures point to a higher open
U.S. stock futures are up slightly after last week’s rally. In the spotlight this morning is the pharmaceutical sector with news that Roche Holdings (RHHBY) bid close to $44B for the stake it didn’t own in Genentech (DNA), and as Merck (MRK) and Schering-Plough (SGP) were due to release a study on a key cholesterol drug. Adding to the rise in the futures is earnings from Bank of America (BAC) which joined its banking peers in reporting declining profits but topping Wall Street estimates at 72c on $20.32B in revenue; consensus was 53c on $18.37B. Currently the indices are showing the S&P 500 futures up 6.3 points to 1,266.70 and that the Nasdaq 100 futures added 15.8 points to 1,844.50. Dow industrial futures rose 59 points to 11,560.
VMware-VMW target lowered ahead of Q2 results@BOFA
Banc of America lowered their target to $45 from $65 ahead of VMW’s Q2 results tomorrow to reflect a lack of visibility around the company’s license revenue trajectory and the new management team. The firm expects management to issue conservative guidance for the remainder of 2008 and keeps a Neutral rating on the stock. :
Semiconductor Production Eqt sector upgraded to Neutral from Cautious@GSCO
Goldman upgraded the SPE sector and added VRGY to its Conviction Buy List.
Yahoo-YHOO announce settlement with Carl Icahn
Yahoo! Inc. announced that it has reached an agreement with Carl Icahn to settle their pending proxy contest related to the Company’s 2008 annual meeting of stockholders. Under the terms of the settlement agreement, eight members of Yahoo!’s current Board of Directors will stand for re-election at the 2008 annual meeting: Roy Bostock, Ronald Burkle, Eric Hippeau, VyomeshJoshi, Arthur Kern, Mary Agnes Wilderotter, Gary Wilson and Jerry Yang. In view of the settlement agreement with Mr. Icahn, and the termination of the proxy contest, Robert Kotick has decided not to stand for re-election to the Board at the 2008 annual meeting.
ImClone-IMCL target raised to $56 from $52, maintain Buy@SBSH
Citigroup raised IMCL’s target after their oncology survey suggested that Erbitux’s market share in 1st-line lung cancer could reach 26% in 12 months.
Sovereign wealth funds were reportedly interested in buying BlackRock shares-FT
Sources say that two sovereign wealth funds may have bought some of Merrill Lynch’s (MER) shares in BlackRock (BLK), if Merrill had put its 49% stake up for sale. Kuwait Investment Authority probably would have bought some of the shares, and Singapore’s Temasek may also have looked to acquire a stake, the sources add.
Bank of America-BAC now sees Countrywide acquisition accretive in 2008
The company previously saw the acquisition as neutral in 2008.
Asian Markets Wrap-Up for Monday, July 21
Asian stocks advanced and were lead by the financial and raw material sectors. The Japanese markets were closed for a holiday. Of the Asian markets only Vietnam declined…CHINA: The CSI 300 Index gained 95.59, or 3.4%, to 2,911.05. Ping An Insurance rose 4.5% to 42.92 yuan. China Merchants Bank was up 4.2% to 23.68 yuan. Daqin Railway Co. climbed 4.4% to 13.73 yuan. Suning Appliance Co. added 5% to 46.25 yuan. China Vanke Co. increased 3.8% percent to 8.96 yuan. Citic Securities Co. jumped 1.20 yuan, or 5.2%, to 24.32…AUSTRALIA: The S&P/ASX 200 Index increased 171.40, or 3.5%, to 5,011.80. National Australia Bank (NABZY) jumped 4.9% to A$28.32. Commonwealth Bank was up 3.7% to A$43.35. Fortescue Metals soared A$1.01, or 12% percent, to A$9.13. BHP Billiton (BHP) gained 4.2% to A$38.20. Rio Tinto Group (RTP) rose 2.6% to A$118.49…AROUND ASIA: In Hong Kong, the Hang Seng Index advanced 658.71, or 3.01%, to 22,532.90.
American Int’l-AIG upgraded to Buy from Neutral@BOFA
Banc of America upgraded AIG shares on valuation as they find the risk/reward attractive at current levels. Target $35.
Schlumberger-SLB target raised to $125 from $120, reiterate Buy@JEFF
Jefferies raised their target after the company’s Q2 results topped their estimate.
Las Vegas Sands-LVS: View shares as undervalued at current levels@JEFF
Jefferies sees a buying opportunity at current levels but lowered their target price to $93 from $116 after fine tuning their model. Shares remain Buy rated.
iPhone sold out at all of Apple’s stores-Website
According to Apple’s (AAPL) website its new 3G iPhone is sold out in all 188 of its retail stores. As of Monday July 21st, Apple’s website no longer shows the 8GB, 16GB (white) or 16GB (black) being available.
Apple-AAPL: Expect Q3 results to exceed consensus estimates@RBCM
RBC expects AAPL to report Q3 EPS of $1.13, above consensus of $1.08, on revenue of $7.5B, above consensus of $7.5B, on Mac momentum and back-to-school promotions. Shares remain Outperform rated.
Fast Money position recap: Jeff likes MCD, Joe likes FCX, Pete like HAL, Karen likes PDE.
Macke Owns (ATVID), (MSFT), (GS), (WMT), (HAS); Pete Najarian Owns (AAPL), (CHK), (TSO), (XLF); Pete Najarian Owns (CSCO) Calls, (MRK) Calls, ; Pete Najarian Owns A (YHOO) Call Spread; Finerman Owns (GS); Finerman’s Firm And Finerman Own (PDE); Finerman’s Firm Owns (MCC), (MSFT), (SUN), (TSO), (VLO), (MCC); Finerman’s Firm And Finerman Own (C), (C) Leap; Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Terranova Owns (VLO), (RIMM), (INTC), (YHOO), (GOOG), (CME), (FCX), (BNI), (XLF), (IYT), (SU), (SA); Terranova Is Short September Crude Oil $130 Puts; Terranova Is Short September Crude Oil $130 Calls; Terranova Is Long September Crude Oil $154 Calls.
Good start to the day and week with the IBB up strongly due to the DNA buyout offer! DNA strong. IMCL, BIIB, GILD, ONXX, GILD, CELG all gapping up. letting the market range early this morning to see how this market gap up will hold. Pick plays with a high probability of success, plan the trade and trade the plan, have focus and patience, run technicals through supply and demand.
