Periodicals Wrap-Up for Friday, July 11th
WALL STREET JOURNAL: Rick Wagoner, the CEO of General Motors (GM), hit out against allegations that the auto maker may soon file for bankruptcy and said he believes the company’s financial position will “remain robust” for the rest of the year. Wagoner also said, the Wall Street Journal reported, that the company has no plans to sell or reduce more of its brands…FINANCIAL TIMES: An independent Yahoo! (YHOO) would be better for the world, Google (GOOG) CEO Eric Schmidt said and the Financial Times reported. Yahoo! will be able to create more competition in the search market and other advertising markets if it stays independent, Schmidt contended…NEW YORK TIMES: According to people briefed on the plan, the New York Times reported that senior Bush administration officials are weighing a plan to have the government take over either Fannie Mae (FNM) or Freddie Mac (FRE) — or both — and place them in a conservatorship if their problems continue or worsen…The New York Times also reported that people briefed on the matter said Anheuser-Busch (BUD) is in active talks to sell itself to InBev in a friendly deal, despite previous hostility to the idea. One person said InBev indicated it may be willing to pay more than the $65 per share originally offered…
U.S. considering government takeover of Fannie Mae, Freddie Mac-NY Times
Senior Bush administration officials are thinking of implementing a government takeover of Fannie Mae (FNM) and/or Freddie Mac (FRE) and putting them in a conservatorship if their situations worsen, people briefed on the situation said.
U.S. equity futures still point to a lower open; U.S. Trade deficit narrows
U.S. equity futures are still pointing to a considerably lower open this morning, with the DJIA futures down 118 points currently at 11,099. The big names of concern this morning are Fannie Mae (FNM) and Freddie Mac (FRE), whose shares are down significantly again on fears of a government takeover, according to reports in the Wall Street Journal. M&A activity is also an area of focus this morning with the New York Times reporting InBev saying it’s close to friendly deal for Anheuser-Busch (BUD), and Citigroup (C) selling its German retail banking operations to Credit Mutuel for EUR4.9B in cash. Crude oil prices is spiking $3.91 to about $145.56. Gold futures this morning are surging on rising oil, and Iranian tensions. August gold is up $16 to $958 an ounce on Nymex. On the economic indicators front: The U.S. Trade deficit narrowed 1.2% in May to $59.5M.
Semiconductors: Most bad news reflected in valuations@STFL
Stifel does not expect any major sell-off this quarter as most the bad news is reflected in valuations. The firm is positive on valuations for Buy rated AMAT, VSEA, and VRGY and would avoid Hold rated FORM.
JEC added to Conviction Buy List; maintain Buy@GSCO
Goldman cites valuation and solid execution for the addition. Target $94.
Biotechnology Q2 Preview@COWN
Cowen’s favorite names to beat Q2 Street estimates are: ALXN, AMGN, CELG, CEPH, and DNA. The firm expects at least in-line reports for AUXL, BMRN, CBST, GENZ, and IMCL and is cautious on AMLN, BIIB, and GILD ahead of reports.
WYNN: Expect prelim results to drive rally in the group@JPMS
JP Morgan believes WYNN’s preliminary Q2 results to drive a rally in the group given the recent share weakness. They point out that WYNN’s Las Vegas were in-line while Macau was much better than expected. The firm maintains an Overweight rating on WYNN shares.
Wynn Resorts-WYNN: Preannounces Q2 results, maintain Positive@SUSQ
Susquehanna said Macau EBITDA beat their estimate by nearly 25% while Las Vegas fell short by 11%. The firm said Las Vegas trends are not a surprise and is encouraged by the results. Target lowered to $93 from $143.
Retail: June comps weak but better than expected; prefer HOTT, TLB, PSUN@FBRC
The firm values these turnaround names and recommends the stocks as L-T buys with quite attractive risk/reward. FBRC selected ARO, URBN and GYMB as they expect these companies to exceed 2Q08 estimates. There were some weak spots, particularly AEO.
Semis: Checks suggest Q3 orders tracking down 5%-10%@SBSH
Citigroup’s checks indicate that orders are tracking down 5%-10% quarter over quarter and that Samsung has significantly downsized 2H:08 orders. The firm took down estimates, downgraded AMAT to Hold, removed KLAC for their Top Picks Live List, and lowered LRCX’s target to $36 from $47 and NVLS’s target to $21 from $24.
ELN initiated with a Sell, target $18@BMUR
Brean Murray initiated ELN with a Sell citing concerns with the clinical development bapineuzumab, which they believe will fail in Ph III trials, and full valuation.
FNM: See no change in fundamentals despite sell-off@PIPR
Piper believes there has not been one significant piece of macroeconomic or company specific news on FNM or FRE to drive the recent weakness. The firm thinks FNM will likely not need new capital unless credit losses rise to over 40 bps, which would be about triple current levels. They maintain a Neutral rating on the stock.
FSLR initiated with a Buy, target $350@CRIS
Caris points to the company’s revenue growth from the expansion of thin film solar technology and technology leadership for their Buy rating.
SPWR initiated with an Above Average, target $80@CRIS
Caris expects the company to post strong revenue growth.
WFR initiated with an Above Average, target $60@CRIS
Caris believes the company has a strong pipeline of business for solar opportunities.
MA to be added to S&P 100; GM deleted as of 7/17 close
General Motors will continue to be a member of the S&P 500.
MA to be added to S&P 500; ACE deleted as of 7/17 close ACE is in the process of changing its place of incorporation to Switzerland, thus rendering it ineligible for inclusion in the S&P U.S. indices.
AAPL: Initial impressions of iPhone 2.0 software are positive@AMTR
After installing an early release version of iPhone 2.0 software, Am Tech believes the new software makes the iPhone more useful and highly customized. The firm believes Apple is one of the best positioned companies and they think it can rise to $220.
Jim Cramer’s “Mad Money”
Cramer again reiterated his belief that the healthcare sector is the place to be given the current market conditions. He expects big money managers to flock to the historically recession-proof stocks and advised investors to get in ahead of the rotation. Cramer recommended Hospira (HSP) as his next investment idea in the group. Hospira, is transforming itself from a boring drug delivery and medication management company into a faster growing, higher-margin oncology powerhouse. After a rocky start, Hospira is finally starting to gain some traction. The company has met or beat earnings expectations for the past seven quarters in a row, giving it a solid track record of results, he said. Cramer also liked the fact Hospira is cutting costs and has increased operating margins. Next, Cramer said he thinks the moment’s right to start buying natural gas. After warning that the sector would be hit and hit big last Wednesday, Cramer said it’s finally time to get back into the natural gas stocks. Cramer is still a fan of Chesapeake Energy (CHK) which completed a secondary offering of 25M shares at $57.25 a share. The company will use the proceeds to increase drilling, a move that’s seen as wildly bullish for the stock, he said. Cramer also voiced his support for Chesapeake CEO Aubrey McClendon, whom he said is the most bankable CEO in America. SELL BLOCK: Cramer gave viewers a list of stocks which he said are the real losers of the new Medicare spending bill that Congress just passed Wednesday. According to Cramer, the managed care providers will be hardest hit by the new $12.5B spending package, and to “stay away from them.” The list includes: Healthspring (HS), Humana (HUM), Coventry (CVH), HealthNet (HNT), Triple-S (GTS) and United Healthcare (UNH). Cramer had high praise for Treasury Under-Secretary Bob Steel, who resigned his position to head the ailing Wachovia Bank (WB). He called Steel “one of the great behind the scenes player” and one of the integral players behind the recent JP Morgan Chase (JPM) and Bear Stearns (BSC) merger. Cramer said the turn-around of Wachovia will take time, and he’s still would not be a buyer of the bank at this time. SUDDEN DEATH: (Bullish) CLHB; SE; JNJ. (Bearish) RIO. LIGHTNING ROUND: (Bullish) AEM; ETN; BQI; FGP; NKE; MOT; CGV. (Bearish) SWC; UA; CRM; UPS; FDX; RMBS.
Fast money position recap- First Moves: Jeff likes USO, Guy likes AA, Karen likes shorting BIG, Pete likes CSCO.
Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Macke Owns (MSFT), (USO), (INTC), (WMT); Najarian Owns (AAPL), (CHK), (MAR), (NOK), (TSO), (XTO), (XLF); Najarian Owns (FNM) And (FNM) Puts; Najarian Owns (YHOO) Calls, (RIMM) Calls, (SLB) Calls, (CSCO) Calls; GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC; Finerman Owns (GS); Finerman’s Firm Owns (DVA), (GE), (MSFT), (NOK), (SUN), (TSO), (VLO); Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm Owns (PLCE) Calls, (TGT) Calls, (HUN) Calls.; Finerman’s Firm Is Short (IJR), (MDY), (SPY), (IWM); Finerman’s Firm Is Long SPX Index Puts; Finerman’s Firm Is Short (BIG).
FNM and FRE are now on the brink of a takeover by the US Government and it is not going well with the market. This is a big financial disruption to the markets and could create the washout needed but more pain could still be on the way before any relief is truly recieved. A bottom will be created over time and will give you enough time to catch it but in the mean time stay defensive and let the market prove it with at least a couple rally waves on strong volume before stepping in. Looking to keep shorts quick as the long weekend could give time to help alleviate the problem. Stay focused, pick plays with a high probability of success, plan the trade and trade the plan. Great luck and great trading.
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