Premarket Analysis for 8/19 - Upgrades/Downgrades, Gappers, Actionable Calls

Posted By Optiondragon for myhappytrading, a website made by traders for traders.

From Briefing.com

Periodicals Wrap-Up for Tuesday, August 19
FINANCIAL TIMES: Lehman Brothers (LEH) is holding talks about selling all or part of Neuberger Berman, its asset management unit, sources said. The division is believed to be worth up to $10B. WALL STREET JOURNAL: General Dynamics (GD) has agreed to buy Jet Aviation for about $2.25B in cash. NEW YORK POST: Bill Ackman is not pleased with CVS Caremark’s (CVS) $71.50 per share bid for Longs Drug Stores (LDG), the Post reports. Ackman has hired Blackstone Group (BX) in an attempt to coax a higher bid from CVS, inside sources say. WALL STREET JOURNAL: Chrysler has sued Johnson Controls (JCI) for allegedly inflating the price of its batteries. The $15M lawsuit contends that Johnson Controls charged Chrysler for more lead than the batteries actually contained.

CME Group to buy the New York Mercantile Exchange for $8.4B-The Chicago Tribune
The CME Group (CME) recieved approval to buy the New York Mercantile Exchange for $8.4B, thus creating the world’s largest derivatives market. The Chicago Tribune reports, over 75% of Nymex members voted for the merger, ensuring that the deal supported by shareholders at both companies will go forward

A major U.S. bank could fail soon, former IMF official warns-UK Times
A large U.S. bank may fail within the next several months, according to Professor Kenneth Rogoff, a former International Monetary Fund chief economist. The credit crisis will get worse before it gets better, Rogoff added.

A major U.S. bank could fail soon, former IMF official warns-UK Times
A large U.S. bank may fail within the next several months, according to Professor Kenneth Rogoff, a former International Monetary Fund chief economist. The credit crisis will get worse before it gets better, Rogoff added.

Russia to pull out of Georgia’s city of Gori from just after 1100 GMT-Reuters

EA, Take-Two may be trying to make a deal-NY Post
Electronic Arts (ERTS) is hoping that its announcement that it will not continue trying to buy Take-Two Interactive (TTWO) will lower Take-Two’s share price, making Electronic Arts’ $25.74 per share bid look attractive to Take-Two investors, sources say. Meanwhile, Take-Two hopes its offer to allow Electronic Arts to conduct more due diligence will result in a higher bid from Electronic Arts, the sources add. On the other hand, a source with ties to Electronic Arts said the company does not want to negotiate with Take Two’s current management team.

Lehman’s moves: Bold or weakness?-WSJ
The thought of Lehman Brothers Holdings (LEH) selling a part of Neuberger Berman was recently viewed by outsiders as unnecessary. Not now. The firm is also said to more intensely be looking to move parts of its asset management business and of its commercial mortgage-related assets.The Wall Street Journal’s “Heard on the Street” doesn’t think all this will result in a happy ending. Are these moves intended to shore up the balance sheet? Or are they hunkering down for third quarter results which aren’t expected to be pretty? An overriding concern is that Lehman will be seen as desperately wanted to sell parts of itself, and that may keep buyers pressing for bargain prices.

U.S. equity futures now point to a lower open
Equity futures are pointing to a much lower open. There was news on inflation on the wholesale level, and home construction. The producer price index showed an increase of 1.2% for the month of July versus an expected increase of 0.6%. That brings the annualized rate to 9.8%. The housing starts came in at 965,000 versus an expected 960,000, and the building permits came in at 937,000 versus the expected 970,000. The futures dropped immediately after the numbers were released and are now pointing to a much lower open.

Musharraf is gone and Pakistani stocks surge-WSJ
Pakistan’s President Pervez Musharraf resigned and the country’s benchmark KSE-100 index jumped 4.5% to 10719.62, and its rupees moved up against the dollar, reports the Wall Street Journal. Analysts, however, say the poor economy will likely limit market gains.

Bristol-Myers-BMY: Think IMCL deal will close nearer to ~$70/share than $60@LEER
While LEER believes a BMY/IMCL deal will happen, especially since BMY has a reported 17% ownership of IMCL stock, they do not think it will close before year-end 2008 at ~$70/share. LEER raised their 2008-2012 EPS estimates given the strong growth in Nutritionals and solid international growth prospects in the L-T. Market Perform rating.

Louis Navellier’s Quantum Growth Update
Louis Navellier’s Quantum Growth Update is positive on CLF, CRY, FLS, FSYS, NTES, and POT; cautious on CEL and BEP.

Louis Navellier’s Global Update
Louis Navellier’s Global Update is positive on BTM and NTES.

First Solar-FSLR: View Ohio expansion as favorable, reiterate Buy@AMTR
Am Tech believes the expansion in Ohio is a signal of FSLR’s view on end market demand. The firm reiterates a Buy rating and $450 target.

Amylin Pharma-AMLN: No change in Outperform rating@BARD
Baird said the six cases of severe pancreatitis were available to the FDA by the 6/8 pre-NDA meeting for LAR and that AMLN commented on 5/1 in an NEJM article that cases with fatal outcome involving pancreatitis have been reported at a similar rates expected in the general population. The firm believes this supports a rebound in shares. AMLN is Outperform rated.

Gilead Sciences-GILD: U.S. HIV prescription trends are negative for Gilead@BERN
Bernstein’s prescription checks indicate that Gilead’s U.S. HIV RTI share gains have not accelerated, while market growth has not increased and the company’s compound volume growth seems to be slowing. The firm expects the slowing growth to continue and they maintained their Market Perform rating.

Softlines: Expect guidance will not be raised when 2Q EPS are reported@FBRC
FBRC anticipates EPS will be in-line or exceed estimates when ARO, ANN, BEBE, GPS and GYMB report their earnings this week, while HOTT and PSUN earnings may be reported at the higher end of guidance. FBRC also anticipates ARO, ANN, GPS, GYMB and HOTT to reiterate their guidance while it is expected BEBE and PSUN will reduce guidance.

WellCare Health-WCG: Small fine bodes well for company@OPCO
After WellCare agreed to pay a $35M fine to the U.S. government due to its failure to meet MLR requirements associated with its Florida contract, Oppenheimer believes the relatively small fine indicates that the company will not be crippled or put out of business. The firm maintained their Outperform rating.

Follow-up: Sun Healthcare-SUNH initiated with an Outperform@LEER
Leerink believes expansion of post-acute care rehabilitation services offers growth and margin improvement opportunities and has a $20-$21 12-month valuation range on the stock.

Coal: China Power Tariff increase just announce@LYON
Calyon said China’s National Development and Reform Commission announced an increase in China power tariffs. THe firm expects the tariff to lead to greater demand for coal in China and tighten an already tight global coal market. The firm reiterates Buy ratings on ACI, BTU, and FCL.

Apple-AAPL: See potential upside to estimates from share browser gains@PACS
PacCrest believes AAPL’s browser share is up 100% in August to .31 % following the launch of its 3G iPhone. PacCrest says share gains correlate to unit gains, where they think AAPL could post upside to their 3.5M unit estimate for Q3. The shares remain Outperform rated.

Suntech Power-STP: Expect Q2 to be aboev Street estimates@COWN
Cowen expects STP to report Q2 results above the Street by 10% or more given higher MW shipments and ASP and may raise 2008 guidance. The firm rates shares Outperform.

Google’s Android gets FCC approval and potential release date-Engadget
The FCC has approved Google’s (GOOG) Android phone and is expected to be released in September or October. The handset is to called “Dream” with a model of “DREA100″.

Rigel Pharma-RIGL is in late-stage partnership negotiations@OPCO
Oppenheimer believes that Rigel is in late-stage negotiations about partnering on its R788 treatment with several companies. The firm expects Rigel to achieve favorable terms on the deal.

Macau Gaming: China may enact further visa limits to Macau@LEHM
According to Lusa News Agency reports, the Chinese government may restrict visas to Macau in order to reduce visits from Mainland China to once every six months from once every two months. Lehman said the government wants to moderate visitation growth and gaming revenues, which could impact estimates.

Oil Services & Equipment: Recommend increasing exposure to the group@BOFA
Banc of America finds the group’s risk/reward favorable. Their top picks are Halliburton (HAL) and National Oilwell Varco (NOV).

Caterpillar-CAT: Channel checks suggest China is on plan@SBSH
Citigroup’s checks suggest that CAT’s largest dealer in China is still on plan for August despite the slowdown in that country. The firm remains comfortable with their above consensus estimates and maintains a Buy rating.

Forest Oil-FST: Reiterate Buy following Buffalo Wallow acquisition@BOFA
Banc of America believes the deal will add to FST’s proven reserves. :

Apple-AAPL: See two potential catalysts for second half of 2008@PIPR
Piper believes AAPL’s back-to-School promotion running through 9/15 and a likely special event in early September to announce new iPods and redesigned Mac portables could provide positive catalysts for the stock. The firm reiterates a Buy rating on AAPL shares.

Broker estimates lowered given the challenging market environment@WBLR
William Blair lowered Goldman Sachs’ (GS) Q3 estimate to $2.80 from $5.00 and FY09 estimate to $18 from $20 to reflect the challenging market environment over the past few months. The firm also lowered Morgan Stanley’s (MS) Q3 estimate to 86c from $1.27 and FY09 estimate to $5.25 from $6.10.

Amylin Pharma-AMLN: Believe Street overreacted to pancreatitis update@PIPR
Piper points out AMLN maintains that the rate of pancreatitis, the rate of necrotizing pancreatitis and the rate of mortality associated with pancreatitis in Byetta-treated patients is less than the rate seen for Type 2 diabetics, suggesting that Byetta is not increasing pancreatitis or worsening outcomes with pancreatitis. Piper continues to believe exenatide once weekly (QW) will be approved without significant delays related to pancreatitis.

MA coverage transferred with a Buy from Neutral@GSCO
Target to $275 from $300.

Myriad Genetics-MYGN will review and consider strategic alternatives
In determining the future course for Myriad, management will do a comprehensive review and consider a variety of strategic alternatives, including but not limited to a possible corporate restructuring which would separate the molecular diagnostic business from the pharmaceutical business as independent operating entities. To assist the Board in considering and evaluating these alternatives, the Company has engaged the investment banking firm of JP Morgan. JP Morgan and the Company’s management will be reporting their analyses to the Board of Directors at the fall Board meetings and, of course, the Board will be responsible for determining the most appropriate strategy to move the Company forward in this new era of profitability.

Memc Electronic Mat-WFR initiated with a Buy, target $70@LYON

Fast money position recap: Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (AAPL) And Is Short (AAPL) Calls; Najarian Owns (CSCO) Call Spread, (SNDK) Call Spread, (ZMH) Call Spread; Macke Owns (MSFT), (UUP), (WMT), (COST), (DIS), (ATVID); Finerman Owns (GS); Finerman’s Firm And Finerman Own (GLNG); Finerman’s Firm And Finerman Own (C) Leaps; Finerman’s Firm Owns (MSFT), (SUN), (TSO), (VLO), (VCLK); Finerman’s Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY), (BBT), (COF).

We are still working diligently with Rackspace, our hosting company,
to block the attacks on our server. Due to scheduling, Rackspace may
not finish installing all the fixes until this weekend. If the site gets
sluggish again, please rejoin us on the old member site, comments board:

Thank you for your understanding.

Think Fractally, formulas are hidden in the market and nature.