Premarket Analysis for 6/2- Upgrades/Downgrades, Gappers, Actionable Calls

Submitted By Optiondragon

Moby-Porcelain

From Briefing.com

Periodicals Wrap-Up for Monday, June 2nd
WALL STREET JOURNAL: Chip suppliers for cellphones including Qualcomm (QCOM), Texas Instruments (TXN) and Nvidia (NVDA) are moving aggressively to make products for Intel’s (INTC) new breed of pocket-size portable devices, called MIDs, the Wall Street Journal reported…UK TIMES: According to the UK Times, Barclays (BCS) and the Royal Bank of Scotland (RBS) were raided by the Office of Fair Trading as part of the investigation into price fixing loans to professional services firms…BLOOMBERG: Almost three dozen of the largest U.S. companies may have to slash their dividends, since the dividends greatly exceed their cash flow, Bloomberg reported. Large companies in this situation include General Motors (GM), Motorola (MOT), and New York Times Co. (NYT)…China Telecommunications Group (CHA) may announce today that it has bought the mobile phone assets of China Unicom (CHU) and its parent company for more than $14.4B, Bloomberg reported, citing the South China Morning Post. China Unicom could say that it is merging with China Netcom Group Corp. (CN) as early as today, the newspaper added…

Solar energy sector may see price slump-FT
The solar power industry could see price slumps due to a surge in the level of manufacturing capacity for solar panels which means that demand may exceed supply for the first time in years. Another factor contributing to potential price drops, is uncertainty over the degree of government subsidies in some key markets for renewable energy.

Sovereign wealth funds provided more than half the equity for Blackrock deal-FT
The BlackRock (BLK) deal for $15B of UBS’s (UBS) troubled mortgage debt highlights the evolving strategies of sovereign wealth funds. This has led to political back lash in the West and now sovereign wealth funds are looking for lower-profile opportunities through private equity funds.

Investor’s guide to Level 3 assets-WSJ
The Wall Street Journal’s “Comment from breakingviews” looks at Level 3 with its own “Idiot’s Guide”, a look at assets with “no observable price.” Accounting rule SFAS 157 means firms must divide up financial assets at market values into three levels. Level one is for assets with an easy to find price. Level two falls between levels one and three. The bottom line: Focus on level two where mortgage bonds and CDOs are if you want to predict a illiquid crisis

Apple’s iPhone coming to Spain-Gizmodo
Citing Spanish Web site Apple Weblog, Telefonica (TEF) will sell Apple’s (AAPL) iPhone in Spain. The 3G iPhone will be available for sale on June 18.

Acorda Therapeutics-ACOR announces positive data from Phase III Fampridine study
Acorda Therapeutics, Inc. announced positive results from its second Phase 3 clinical trial of Fampridine-SR on walking ability in people with multiple sclerosis. A significantly greater proportion of people taking Fampridine-SR in the trial had a consistent improvement in walking speed compared to people taking placebo, as measured by the Timed 25-Foot Walk. Consistent improvement in walking speed was the primary endpoint of the study as outlined in the Special Protocol Assessment with the U.S. Food and Drug Administration.
Great results and nice pop for shares premarket. I called this and have this name.

DNA: ASCO results are positive for Genentech@BMOC
BMO Capital notes that Genentech’s Avastin, when combined with chemotherapy, was found to be more effective than chemotherapy alone, in a study presented at the American Society of Oncology, or ASCO, meeting. In addition, no safety concerns were mentioned about Avastin’s use as a treatment for adjuvant colorectal cancer. The firm maintained their Market Perform rating on Genentech.

Investors will receive manufacturing data today, vehicle sales for the month of May tomorrow, mortgage and job data on Wednesday, employment data on Thursday, and non-farm payroll data on Friday.

IBM: Quarter is on track with four weeks to go@AMTR
Am Tech believes IBM’s quarter is on track to meet or exceed consensus estimates with four weeks to go as their sources indicate the new Z10 mainframe continues to help drive momentum. Shares remain Buy rated.

CSIQ signs $500M supply agreement with Neo Solar Power
Under the terms of the new agreement, NSP will supply several hundred megawatts of solar cells through 2013. The total contract value exceeds US$500 million.

Biotechnology: Believe Avastin’s market position is secure@JPMS
JP Morgan believes the Erbitux data presented at ASCO should quell investor fears of increased competition for Genentech’s (DNA) Avastin. The firm found the FLEX data for Imclone’s (IMCL) Erbitux underwhelming. Overall, JP Morgan thinks ASCO 2008 was good for DNA and Celgene (CELG) and not good for IMCL and Medarex (MEDX).

IPI initiated with a Neutral, target $55@GSCO
Goldman cites valuation for its Neutral rating.

MA: Estimates and target raised to $390 from $350@RHCO
Suntrust believes MA is ideally positioned to continue to benefit from the global shift to electronic payments and has increased confidence given the company’s strong non-US volume growth. Shares are Buy rated.

CTSH upgraded to Buy from Neutral@MLCO
The rating changes reflect Merrill’s new rating system based on relative recommendations within the sector.

EDU: Recommend buying stock as shares settle@OPCO
After the stock sold off due, in Oppenheimer view, to the Chinese earthquake, increased competition, and the anticipated business disruption of the Beijing Olympics, Oppenheimer believes that New Oriental should continue to be the leader in China’s rapidly growing education market. The firm maintained their Outperform rating.

GS upgraded to Buy from Neutral@MLCO

ANR upgraded to Overweight from Equal Weight@MSCO
Morgan Stanley upgraded ANR based on expectations for higher coking coal prices. Target $100. :

MYGN volatility at 101 into Alzheimer’s data
MYGN closed at $48.42. MYGN’s Flurizan, a treatment for Alzheimer’s diseases is expected release top-line results in June. MYGN June & July option implied volatility of 101 is above its 26-week average of 65 according to Track Data, suggesting larger price movement.
We will be analyzing this name as we go but our read so far is that it might show a benefit in a subgroup of patients but could have some major problems reaching primary endpoints.

HK upgraded to Overweight from Equal Weight@LEHM
Lehman upgraded HK citing the company’s unbooked reserve potential. Target to $35 from $23.

MEE upgraded to Outperform from Market Perform@FBRC
Friedman Billings upgraded MEE based on higher coal forecasts.

DO upgraded to Add from Neutral@LYON
Calyon upgraded DO based on valuation. Target $156.

LDK downgraded to Equal Weight from Overweight@MSCO

SOL downgraded to Underweight from Equal Weight@MSCO

ENER initiated with an Equal Weight@LEHM

Google’s Gphone delayed until 2009, source says-TheStreet.com
According to a source familiar with the matter, Google’s (GOOG) Gphone may not be ready until sometime in 2009.

AAPL target raised to $225 from $195 on favorable checks@TWPT
Thomas Weisel raised AAPL’s target to $225 to reflect favorable Mac checks and a more bullish outlook for the iPhone. The firm believes AAPL is on track to meet Q3 estimates and sees upside potential to FY08 and FY09 estimates. Shares remain Overweight rated.

Eaton’s shares could climb more than 20% - Barron’s
Under the reigns of CEO Alexander “Sandy” Cutler, Eaton Corp. (ETN) managed to increase is already solid profits again last year. He has cut automotive and trucking to 28% of the company’s sales from 38% in 2000. And he has built up a wide array of other industrial businesses, from managing power for data centers to manufacturing hydraulic systems for Airbus’ huge A380 jet. ETN’s trucking business is increasingly focused on energy efficiency. Just recently ETN won orders for 207 hybrid diesel-electric transit buses for Guangzhou, China, and 200 hybrid-electric vehicles for United Parcel Services (UPS). Barron’s says, though wall street hasn’t caught on, the strategy is yielding impressive returns. Eaton has boosted earnings by an average of 22% a year over the past 5 years, one of the best performances among diversified industrial concerns, and it expects a 17% jump this year. Eli Lustgarten, a senior analyst at Longbow Securities, who rates the stock a Buy with 12 month target of $117 (20% upside), says ETN is “by far one of the cheaper industrial stocks.” Also, Ohio-based James Investment Research, which has recently been adding to its Eaton position, likes the company’s low price-to-sales ratio of 1. Another attraction is ETN’s dividend, which yields 2.1%. Its long-term debt is a manageable $2.7B, about 30% of capitalization. Investors are coming to appreciate the strengths of ETN’s products and global markets. :

Weekly additions to the Investors Business Daily-100
The following are additions to the Investors Business Daily- 100 list for the week of May 30: Netlogic Microsystems (NETL), Simcere Pharmaceuticals (SCR), Woodward Governor (WGOV), Cameron International (CAM), Aeropostale Inc. (ARO), Nordson Corp. (NDSN), Flir Systems Inc. (FLIR), Systemax Inc. (SYX).

Weekly subtractions from the Investor’s Business Daily-100
The following are subtractions from the Investors Business Daily-100 list for the week of May 30: New Oriental Education & Tech. Group (EDU), Kirby Corp. (KEX), Venoco Inc. (VQ), Anadarko Petroleum (APC), Nexen Inc. (NXY), Canadian Natural Resources (CNQ), Core Laboratories (CLB), NVE Corp (NVEC).

Jim Cramer’s “Mad Money”
On Friday, Cramer said a return by the Banks could be in store for next week and could set off a marketwide rally. Cramer says this depends on two factors: housing and unemployment. Falling home prices and weak employment numbers have killed the banks. But earnings from Toll Brothers (TOL) and Hovnanian Enterprises (HOV) next week, as well as Friday’s job report, could change that. If the two homebuilders show some stabilization, the mortgage-backed securities which have been at the center of the credit crisis could regain pricing strength. That would lift a lot of pressure off companies like C, WFC, MER, and LEH. The possibility for a bottom in housing should result in a bottom for banks. Then, a decent jobs report will just add to the good news, taking the banks, and the market even higher. Add to that a drop in oil prices, and investors will benefit. Conversely, if the homebuilders post poor results and the jobs number disappoints, then it will be bad for financials. If that happens AIG, WM, WB and BAC could drop to new lows. But, Cramer feels positive about the outcome overall. Until Friday, he says stay conservative. Next, Cramer wants to offer a new rule for investors: Never turn an investment into a trade. He said, an investment, is a stock you should hold for much longer, usually about 18 months. Investments forego the quick gains for a bigger return down the road. Investors will often catch a jump in share price on a catalyst and then exit the stock. Cramer said he did it once when he bought Apple (AAPL) at $26 back in 2004 on the strength of the iPod. He caught 5 quick points and cashed out, missing its move toward $200, by not holding the shares longer-term. Then Cramer said, stocks that trade under $10 can sometimes be too attractive. But, stocks don’t drop below $10 for no reason. Most likely, it’s a result of some sort of trouble. Cramer said he once overlooked Charter Communications’ (CHTR) massive debt because the stock was trading at only $4. He bought a position, and the stock soon dropped to $2. To avoid this happening to you, Cramer recommended the “multiply by 10″ test. If Charter were $40 and had the problems it did at $4, would he have wanted it? Probably not. Cramer says being late to the game can cost you money. He says products aren’t stocks, do your homework and make sure you catch the stock at the beginning of the product cycle, and not the peak. He made that mistake in Citrix Systems (CTXS) a while back with their “Go to My PC” product. Lastly Cramer talked about loving a good dividend yield. He says some of the best dividends are taxed at the regular rate of 35%. You get around that, he said, by buying these stocks for your 401(k) or IRA. If you want an incredibly high and often safe yield, go with a REIT like HCP Inc. (HCP) or a royalty trust like Permian Basin (PBT), Cramer said. Royalty trusts can pay out as much as 15%, he said.

Fast Money position recap- Jeff likes COST on a pullback, Guy likes NUE, Pete likes SYMX, Karen likes MPG.
Macke Owns (MSFT), (INTC), (DIS), (WMT), (ATVI); Najarian Owns (AAPL), (ANR), (BHI), (BKC), (HPQ), (TSO), (XLF), (AMLN), (HD), (SYMX); Najarian Owns (HK) Calls; Najarian Owns (EXM) And (EXM) Puts; Adami Owns (BTU), (C), (GS), (INTC), (MSFT), (NUE), (AGU); Finerman Owns (GS); Finerman’s Firm And Finerman Own (GLNG), (HD); Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm Owns SXP Index Puts; Finerman’s Firm Owns (AAPL), (MSFT), (SUN), (TSO), (VLO), (SBUX), (MPG); Finerman’s Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY).

Looks like the solars are taking a breather today. Solars have been so volatile! Coal is getting nice upgrade today. MEE, WLT, FDG, ANR!, CNX, CLF, MTL, TCK, ACI, ICO, PCX all responding (look at the price targets from FBR on the coal names up top!). Market looks initially weak to start the morning, going to see how the market ranges and acts for the first couple hours. Going to look for great setups. Stay focused, look for high probability trades, and keep positive. Great Luck and great trading.