Periodicals Wrap-Up for Thursday, June 5th
WALL STREET JOURNAL: Verizon Wireless, a joint venture of Vodafone Group (VOD) and Verizon Communications (VZ), is in talks to acquire Alltel Corp. in a deal valued at about $27B, the Wall Street Journal reported If successful, the combined companies would create the largest cellphone company, and would be better positioned to compete against AT&T (T)…Gregory B. Penner, the son-in-law of Wal-Mart (WMT) chairman S. Robson Walton, is expected to join the company’s board of directors, a move seen as the beginning of a leadership change at the company, according to the Wall Street Journal…FINANCIAL TIMES: The Financial Times reported that Singaporean sovereign wealth fund Temasek refused to provide funds to Bear Stearns shortly before Bear’s sale to JPMorgan. (JPM). Temasek reportedly refused the request for practical and political reasons…Russia’s Interior Ministry questioned the head of BP’s (BP) Russian oil venture as part of a criminal investigation into possible large-scale tax evasion, the Financial Times reported…
Developers see first version of Apple’s Mac OS X 10.5.4-MacRumors.com
Apple (AAPL) has already started seeding developers with the first version of Mac OS X 10.5.4. There is no time frame for the release but the company can wait months between maintenance release.
AAPL: Checks indicate new iPhones will be announced next week@AMTR
Am Tech’s supply chain contacts indicate that Apple will introduce new iPhones at its WWDC event, and the firm predicts that the 3g hardware will be priced in-line with other products, while the prices of 2.5g versions will be reduced by $50-$100. Am Tech believes Apple is a must-own large tech stock, and they recommend buying it on any pullbacks.
MBIA, Ambac may not attempt to preserve their credit ratings-Bloomberg
MBIA (MBI) and Ambac (ABK) may abandon their struggle to retain Aaa credit ratings for their bond insurance units, following Moody’s decision to put the units’ ratings under review for a second time this year. The bond insurers said they would not raise capital following Moody’s move, which the ratings agency said would probably result in downgrades of the companies’ insurance ratings.
JASO: View shares are undervalued, reiterate Strong Buy@NEED
Needham points out the company has supply agreements for silicon wafers that more than covers 100% of their 2008/2009 sales estimates. They view shares as undervalued at 12x their 2009 estimate and reiterate a Strong Buy rating.
U.S. equity futures are pointing to a higher open as retail sales for the month of May are being released. Individual stores are releasing figures this morning but the chain-store sales report is due out this afternoon at 1:00 pm ET. Analysts are expecting an increase of 1.8%. Although sales have been lower there is hope that consumers will use their government stimulus checks to help them going forward. Investors also received employment data when the initial jobless claims report was released. It showed initial jobless claims were 357,000 versus an expected 375,000. The futures liked the number as they rallied right after its release.
GOOG: Incrementally more positive on mobile strategy@LEHM
Lehman said they are incrementally more positive on GOOG’s mobile strategy heading into 2H08 and 2009 based on the new 3G iPhone expected to be announced next week, Android handsets expected later in the year, and more favorable mobile markets. The firm expects GOOG to have a material share of the mobile ad market, which they expect to reach $15B by 2011. Shares are Overweight rated.
NUE target raised to $100, maintain Overweight@JPMS
JP Morgan raised their estimates and target to reflect strong pricing in the domestic steel market.
NVDA upgraded to Buy from Neutral@GSCO
Follow checks, Goldman said they are move constructive on NVDA’s competitive position in desktop GPUs and believe there may be some upside in its chipset business given stronger sales for Intel platforms.
Handheld Devices: Expect beat and raise quarter from RIMM@SBSH
Citigroup expects Research in Motion (RIMM) to report another strong beat and raise quarter on June 25th, but thinks channel inventories will increase again. However, they point out that increased channel inventories have proved to be “just noise” in the past so long as growth continues. Citigroup expects Palm (PALM) to show continued Centro traction, but believes this is coming at the cost of financials, and could hurt margins.
FSLR: See no change in fundamentals, maintain Buy@DBAB
Deutsche Bank believes concerns of CEO stock sales, potential legislation banning cadmium, and tellurium availability are “recycled issues” and sees no fundamental changes at FSLR. The firm maintains a Buy rating and $300 target.
Machinery: CAT, PH, KMT, URI, HEES, RRR, PCAR, & NAVZ downgraded@UBSW UBS said the risk/reward profile for owning Machinery stocks given macro challenges and valuations. The firm downgraded CAT, PH, and KMT to Sell from Neutral; and URI, HEES, and RRR to Neutral from Buy. Additionally, shares of PCAR were cut to Sell from Neutral and NAVZ downgraded to Neutral from Buy due to weak US truck demand.
Wal-Mart-WMT sees June SSS ex-fuel up 2%-4%
Wal-Mart-WMT says guidance reflects potential benefit of stimulus checks
Bond insurers: Recommend avoiding until visibility improves@BOFA
Banc of America believes the worst is not over for the bond insurers after Moody’s announced that it has placed the triple-A ratings of both Ambac (ABK) and MBIA (MBI) on review for possible downgrade. The firm believes further downgrades are likely coming and recommends avoiding the sector until visibility improves, with the exception of their top pick Assured Guaranty (AGO).
NFX added to Top Picks List; maintain Outperform@FBRC
Friedman Billings expects NFX’s production growth at Woodford Share is at an inflection point as success in application of new drilling and completion methodology will drive material growth. Target $90.
ATI, CRS, and HAYN downgraded to Neutral from Overweight@JPMS
JP Morgan downgraded ATI, CRS, and HAYN to Neutral from Overweight based on the decline in nickel prices and its impact on nickel-based metals demand.
NVDA upgraded to Buy from Neutral@GSCO
SGP upgraded to Buy from Neutral@GSCO
Goldman upgraded SGP citing the company’s pipeline. Target $24.50.
AAPL: Remains their Top Pick in IT Hardware@LEHM
Lehman expects the most focus at the WWDC will be around the iPhone’s business model in and how it will drive unit volumes at carriers. The firm does not expect to see any new Macs at the WWDC but they do expect new redesigned notebooks in the next quarter, which will help September quarter results. Shares are Overweight rated.
Nucor-NUE raises Q2 EPS guidance to $1.75-$1.80 vs. consensus of $1.69
Prior guidance was for $1.55-$1.60. Actionable.
NUE target raised to $100, maintain Overweight@JPMS
JP Morgan raised their estimates and target to reflect strong pricing in the domestic steel market.
Pre-Market Movers: Ahead of the Bell from flyonthewall.com
While weak financials were the focus in yesterday’s session, today it is strong tech and retail that is getting the attention of traders. Those two groups are where the vast majority of the volume is so far and all to the upside. Ciena (CIEN) is the volume leader this morning, trading up +2.9%. The company missed EPS estimates in their report today, but noted that they expect FY08 revenue growth of 27%. Lehman (LEH) which had a wild ride in both directions yesterday is trading up +2.7% after Bloomberg reported Deutsche Bank analyst Mike Mayo was positive on the shares. Nvidia (NVDA) is trading up +4.6% after Goldman Sachs upgraded the shares to Buy from Neutral. In the retail group as same store sales numbers come out the upside reactions appear universal. Kohl’s (KSS) is trading up +3.49%, Abercrombie & Fitch (ANF) is trading up +3.38% and Wal-Mart (WMT) is trading up +1.42%. Look for retail to be a hot spot on names and the index and related ETFs including the S&P Retail Index SPDR (XRT) and Retail HOLDRS (RTH).
Fast Money position recap- First Moves- Jeff likes DIS, Guy likes HOT, Karen and Pete like MSFT. Macke Owns (HAS), (INTC), (MSFT), (DIS); Adami Owns (BTU), (C), (AGU), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL), (ANR), (BHI), (CHK), (HPQ), (TSO), (XLF); Najarian Owns (LEH) Puts; Finerman Owns (GS); Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm And Finerman Own (FLS); Finerman’s Firm Owns (AAPL), (MSFT), (NYX), (SUN), (TSO), (VLO), (UFS) Finerman’s Firm Owns SPX Index Puts; Finerman’s Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY).
Retail figures were strong and that gave a big boost to the futures in premarket. The jobless claims helped as well. I expect a market bounce today and it should last through the day. Looking at the 4 Horsemen (GOOG, AAPL, RIMM, AMZN); tech- NVDA, INFY, BIDU, big cap tech (CSCO, INTC, MSFT); steel- X, CLF, MT, NUE- upgrade actionable, SCHN, RS, AKS; solars- ENER, FSLR, JASO,SOLF, LDK. FXI looks to bounce due to retail sales (FXP short). My CNBC Million Dollar Challenge Portfolio is now ranked #145 in the world. Value at $1.405 million. I’m chipping away at the lead. I also have another portfolio in the contest at rank #318 with $1.367 million. These ranks are amazing since there are several hundred thousand portfolios in the CNBC contest. Look for great setups, high probability plays. Stay positive. Great Luck to you and Great trading.
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