Submitted By Optiondragon
From Briefing.com
Periodicals Wrap-Up for Wednesday, August 6th
WALL STREET JOURNAL: Increasing commodity prices, tough competition, little international exposure and slowing sales all mean that Tootsie Roll Industries (TR) is a troubled company that may be a takeover target, according to the Wall Street Journal. “I don’t see why Nestle (NSRGY) or Hershey (HSY) or Cadbury (CBY) wouldn’t own it,” said Richard Howard of Prospector Partners…FINANCIAL TIMES: The Financial Times reported that Citigroup (C) is developing a plan to merge its equity research operations with its institutional securities business. Under the plan, which is still being developed and may be changed, the investment bank would create a single unit housing all of its analysts, in an attempt to reduce its costs and provide more efficient service to its clients…NEW YORK POST: The New York Post reported that Deutsche Bank (DB) executive Stephane Farouze is suing the son and brother of U.S. Senator Joseph Biden. In the $10M lawsuit, Farouze alleges that Biden’s son Hunter and his brother James schemed to defraud him in a 2006 business deal. Farouze, who is now head of global derivatives at Deutsche, contends that the Bidens never paid him the price they had agreed upon for Farouze’s stake in hedge fund Paradigm Cos…BLOOMBERG: According to a person familiar with the situation, Bloomberg reported that Morgan Stanley (MS) told thousands of clients they won’t be able to withdraw money on their home-equity credit lines. The source said most of the clients had properties that have lost value…
Cephalon-CEPH: Shares still cheap given the pipeline potential - Barron’s Online
With new drugs driving sales and profits, Cephalon’s (CEPH) story should have a happy ending. Cephalon has launched two new drugs, Amrix a muscle relaxant, and Treanda for chronic lymphocytic leukemia, that could help reverse last year’s falling profits. And it aims to launch a third drug, Nuvigil, a longer-acting cousin to Provigil its sleeping disorder drug, in 2009. Shares have jumped 29% from a 52-week low in February, a sharp contrast to a withering S&P’s 500 and the stock prices of many larger drug makers. Yet despite the five-month rally, Cephalon’s multiple of 14.6x forward profits still looks cheap, a 26% discount to the biotechnology industry, and a slight discount to its projected annual long-term growth rate. Thus, offering backers the opportunity for more gains if the company can deliver robust profit growth. Since Cephalon released Q2 results last week, analysts at UBS, Jefferies & Co., S&P and Robert W. Baird hiked price targets. Lehman’s Jim Birchenough says, “Cephalon is in the very early innings, and the stock has lots of room to move.”
EIA Petroleum Status Report released on 8/6 at 10:35 AM
Morgan Stanley is reportedly freezing some home equity credit lines-Bloomberg
Morgan Stanley (MS) is preventing thousands of its clients from withdrawing funds from their home equity credit lines, an inside source said. Most of these clients’ properties have lost value, the source added.
Asian Markets Wrap-Up for Wednesday, August 6
Asian stocks soared because of declining oil prices and the hope that it will have a positive overall affect on economies. All markets gained except for Pakistan…JAPAN: The Nikkei 225 Stock Average advanced 340.23, or 2.6%, to 13,254.89, while the broader Topix index was up 29.56, or 2.4%, to 1,277.27. Mazda jumped 7.2% to Y594. Fuji Heavy Industries Ltd. gained 6.9% to Y572. Bridgestone (BRDCY) was up 6.8% to Y1,832. Canon (CAJ) added 5% to Y5,090. Sony Corp.(SNE) increased 5.7% to Y4,290. Sanyo Electric Co. (SANYY) soared 10% to Y228…CHINA: The CSI 300 Index increased 18.61, or 0.7%, to 2,721.69. Merchants Bank added 1.9% to 24.16 yuan. Citic Securities Co. rose 2.7% to 22.85 yuan. Air China increased 1.6% to 9.92 yuan. China Southern Airlines Co. (ZNH) added 1.7% to 7.77 yuan. China Petroleum & Chemical Corp. (SNP) was up 3.2% to 11.58 yuan. China Railway Group climbed 0.11 yuan, or 2%, to 5.61…AUSTRALIA: The S&P/ASX 200 Index advanced 148.70, or 3.1%, to 4,969.10. Harvey Norman Holdings was up 22 cents, or 6.9% to A$3.43.Commonwealth Bank of Australia rose A$2.60, or 6.3%, to A$43.85. National Australia Bank (NABZY) added A$1.25, or 5.1%, to A$26. Newcrest Mining (NCMGY) lost 91 cents, or 3.5%, to A$25.40.
Citigroup may be forced to spend billions in buybacks-WSJ
Citigroup (C), in talks with the New York State Attorney General’s office, other state securities regulators and the SEC over alleged wrongdoing in the auction rate securities market, may end up spending $5B in buybacks and face a fine of about $100M, reports the Wall Street Journal.
iPhone will be available to Indian users on August 22-Business Standard
Business Standard reports that on August 22, Apple’s (AAPL) iPhone will be made available to Indian mobile users. Apple has been tied to Airtel and Vodafone (VOD) to make the device available in the country. The iPhone will compete in India with phones by cell phone makers Nokia (NOK), Motorola (MOT) and Samsung.
Top ranked First Fed Financial struggles with payment option mortgages-WSJ
In 2007a trade magazine ranked FirstFed Financial (FED) one of the top five banks in the U.S. in part because of how well it managed its risky mortgage loans. No more. Now the bank’s losses are mounting and its losses totaled about $70M in the first quarter. Its foreclosed homes doubled from the first to the second quarter. And, the bank is in the unflattering position of being a leader in a new home mortgage problem, namely payment option mortgages, reports the Wall Street Journal. Those loans were to borrowers with good credit who are now facing defaults that could surpass the subprime crisis.
Western countries calls Iran’s response to demands “evasive”-Washington Post
Yesterday, the government of Iran said it will respond to a package the U.S. and other world powers offered once the countries “simultaneously” provide a more detailed explanation of the offer. The U.S., Britain and France, which are said to have offered the incentives package in exchange for suspension of Iran’s uranium-enrichment program, called the response by Iran “evasive”. A spokesman for the U.S. mission to the United Nations says Iran will need to issue a “very clear” response and a European official said asking for further details is a “stalling tactic”. If Iran does not respond positively and unambiguously to the offer, the countries have said they will hold a conference call today to consider a response to the statement.
U.S. equity futures continue to point to a lower open
Equity futures continue to point to a lower open as the markets attempt to consolidate yesterday’s big gains. Corporate profits continue to flow in and there was a surprising gain reported from Ambac Financial Group (ABK). The company reported higher profits due to mark to market gains from the CDO securities it currently holds. Freddie Mac (FRE) on the other hand reported larger than expected losses and said they will raise new capital and cut their dividend to shore up their balance sheet. That news has the financial stocks under pressure as well as the futures.
Google launches a free music search service in China-WSJ
Google (GOOG) has launched its free music in China following a number of negotiations, reports the Wall Street Journal. The venture will be supported by advertising and will be shared between Google, music firms and Top 100.cn, a Chinese music company.
Will Apple release a new touch screen iPod?-BusinessWeek
Will there be a new touch screen iPod from Apple (AAPL) coming soon? BusinessWeek’s “Technology” column speculates that it could happen in time for this year’s holiday sales.
Onyx Pharma-ONXX: 2Q earnings disappointing; growth opportunities remain@LEER
LEER anticipates that as Nexavar becomes available in additional areas of Europe and Asia, that Nexavar sales for liver cancer will drive the stock in the N-T. The firm’s current valuation for the stock is $40; maintain Market Perform rating.
Vertex Pharmaceuticals-VRTX downgraded to Neutral from Positive@SUSQ
Susquehanna downgraded shares to reflect competitor Schering-Plough’s (SGP) Phase II trial results for boceprevir.
American Superconductor-AMSC: Company’s results were misunderstood@KBRO
Kaufman Bros. reported that the company’s operational EPS was (4c) per share compared with their estimate of (3c), but the company’s overall EPS was (15c), due to taxes and other income losses, causing the shares to drop $6 at the open. The firm believes lack of understanding of the company’s results caused the stock to fall $6 at the open, and they reiterated their Buy rating.
Merrill Lynch-MER: Believe dividend should be cut by 64%@BERN
Bernstein believes MER should cut its dividend by 64% to 50c from $1.40, lowering payments to shareholders by $1.54B in 2010. The firm thinks the dividend payout places constraints on the company’s inventory and balance sheet capacity and keeps a Market Perform rating on shares.
Cisco-CSCO: 4Q EPS solid upside results; remain buyers of the stock@FBRC
FBRC modestly reduced their 1Q09 and FY09 EPS estimates, given management’s slightly lowered guidance while maintaining their $31 target price. Valuation still attractive. Reiterate Outperform rating.
Cisco-CSCO: Risk/reward ratio is not very favorable@JMPS
After Cisco reported slightly better than expected EPS for its Q4, JMP Securities does not believe the company’s risk/reward ratio will enable it to outperform the market. The firm maintained their Market Perform rating.
Cleveland Cliffs-CLF: See attractive entry point at current levels@DBAB
Deutsche Bank strongly reiterates their Buy rating and $150 target.
Freeport McMoRan-FCX added to Top Picks Live List@SBSH
Citigroup believes current share levels provide an attractive entry point and reiterates a Buy rating with a $142 target.
Zions Bancorp-ZION removed from Conviction Sell List; maintain Sell@GSCO
Mosaic-MOS removed from Conviction Buy List; maintain Buy@GSCO
RadioShack-RSH removed from Conviction Buy List; maintain Buy@GSCO
Jacobs Engineering-JEC removed from Conviction Buy List; maintain Buy@GSCO
Boeing-BA removed from Conviction Sell List; maintain Sell@GSCO
Priceline.com-PCLN: Believe shares are oversold after earnings@BOFA
Banc of America believes the sell-off post results was an overreaction to European bookings growth coming in at the low end of guidance and ignored the outperformance of EPS and revenues as well as the increased guidance. The firm reiterates a Buy rating and $155 target.
Holly-HOC reports Q2 EPS 23c vs. consensus of 65c
Reports Q2 revenue $1.74B vs. consensus of $2.1B.
Yingli Green Energy-YGE reports Q2 EPS 26c vs. consensus of 21c
Reports Q2 revenue $289.7M vs. consensus of $234.27M.
Yingli Green Energy-YGE sees FY08 revenue $1.05B-$1.11B vs. consensus of $1.03B
AMBAC Fin’l-ABK reports Q2 EPS $2.80 vs. consensus of (65c)
Reports Q2 revenue $1.33B vs. consensus of $446.1M. The company said results were boosted by a mark-to-market gain.
Freddie Mac-FRE reports Q2 EPS ($1.63) vs. consensus of (53c)
Reports Q2 revenue $1.69B vs. consensus of $2.18B.
Freddie Mac-FRE CEO says ‘committed’ to raising $5.5B in new capital
Microsoft-MSFT: Recommend buying shares ahead of potential buyback@UBSW
UBS believes MSFT could be preparing for a $20B stock buyback, one that would be completed over the next three months. The firm recommends buying the stock now as the company is unlikely to make an announcement until the buyback has been completed. UBS thinks MSFT shares could reach $40 in the next year.
Encore Acquisition-EAC reports Q2 adjusted EPS $1.65 vs. consensus of $1.59
Reports Q2 revenue $354.8M vs. consensus of $304.54M.
(Important note on how to use this upgrade/downgrade list with analyst comments and news….you must parse out the factual data (Factual data is the most important) from the opinionated data and always take all analyst comments with a grain of salt. Do not follow blindly with their recommendations. Remember that technicals are the most powerful force in short term direction for stock prices due to the law of supply and demand.)
Jim Cramer’s “Mad Money”
Cramer went over his “rally playbook”. He said investors shouldn’t let their emotions prevent them from doing what is needed during big rallies. He said investors often let emotions sway them to hold on to their stocks — the exact opposite of what they should be doing. “The goal is to buy low and sell high,” he reminded viewers, “so when the market’s up big, it’s time to lock in some profits.” Cramer also reminded viewers that gains in the market are not really gains until the stocks are sold. He said the way to play big market rallies is to sell in increments during the rally. He said investors should not get swept up in the market euphoria, but rather scrutinize each and every stock in their portfolios to determine if it has earned the right to stay there at its new higher price. Cramer went on to say that when stocks get more expensive, they inherently get less desirable for investors. As a result, it makes sense to trim a portfolio during a rally. The next rules for playing a rally are to “raise cash” and “don’t buy.” Cramer explained that selling into strength is the only way to stockpile cash so investors can buy stocks back at lower prices later. He said rallies are the perfect time for investors to stop trading on margin. Cramer also said investors should refrain from buying stocks the day after a big rally. According to Cramer, the market will invariably retreat after big moves and only then is it a good time to buy. Cramer mentioned two types of stocks that he says must be sold into a rally. The first are stocks that have already had great runs. The second, are the losers. He said stocks that don’t perform well during a market rally often have underlying issues. Cramer warned that making too much money during a rally is also a problem. He cautioned that if investors’ portfolios are posting huge gains, it probably means that they’re taking on too much risk.
Fast Money position recap- First Moves: Jeff likes COST, Karen likes FLS, Tim likes FCX, Guy likes XOM.
Finerman’s Firm Is Short (IYR) (IJR) (MDY) (SPY) (IWM) (COF) (BBT) (XLF), Finerman’s Firm And Finerman Own (C) Leaps, Finerman Owns (GS), Finerman’s Firm Owns (MSFT) (PM) (RIG) (SUN) (TSO) (VLO) (WLP) (UNH) (AET), Finerman’s Firm Owns (ANF) Call Spreads, Finerman’s Firm And Finerman Own (FLS), Macke Owns (MSFT) (WMT) (COST) (DIS), Macke Is Short (TM), Adami Owns (AGU) (C) (BTU) (GS) (INTC) (MSFT) (NUE), Seymour Owns (AAPL) (CSCO) (INTC) (MER) (MSFT) (TSO) (EEM) (F) (SHLD), Seygem Asset Management Owns Gazprom OAO, Adami Owns (C) (AGU) (BTU) (INTC) (MSFT) (NUE).
Big market move to the upside as the market is reaching the critical level of 1290 on the S&P 500. The FRE news is hurting premarket futures but ABK earnings news was very positive with a markup in their CDO portfolio. Looks like commodity and energy plays are showing strength in premarket after the recent sharp selloff. Let’s see if the market can hold these levels for a push higher. Consolidation up here is good news, a sharp reversal would be negative. Pick plays with a high probability of success, have focus and patience, run technicals through supply and demand. Great Luck and HappyTrading!
Happiness is the meaning and the purpose of life, the whole aim and end of human existence. -Aristotle
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