Data Feed

Gapping up: JCTCF +29.1%, AL +10.8%, ARIA +10.1%, BQI +9.3%, FCSX +7.6%, AEO +7.2%, CENX +6.3%, AA +6.1%, ANF +5.2%, REDF +4.2%, SMSI +4.0%, NOK +3.0%, FCX +2.6%, EMC +2.5%… Gapping down: IMCL -6.0%, FLOW -4.5%, SBEI -4.3%, M -2.3%, MFLX -2.2%, BMY -1.3%, ALU -1.2%.

S&P futures vs fair value: +6.0. Nasdaq futures vs fair value: +8.0.
Early indications suggest that yesterday’s recovery efforts will carry over into this morning’s open. While it’s still too early to tell just how healthy the consumer was last month, as June same-store sales continue to roll in, a potential blockbuster acquisition is helping investors so far look past a profit warning from Motorola (MOT). Rio Tinto (RTP) has made a $38 bln cash bid for Alcan (AL). That’s a 12% premium to yesterday’s closing price and its easily tops Alcoa’s (AA) original cash and stock offer of $27 bln

Here’s a brief list of stocks that closed near key moving averages (20-day ema, 50-day ema/sma, & 200-day ema/sma) yesterday. Stocks that closed near their 20-day ema include: DECK, MGM, CLWR, FCSX, VLCM, FTEK, & WINN. Stocks that closed near their 50-day ema/sma include: CRZO, RSH, HELE, & AMTD. Stocks that closed near their 200-day ema/sma include: NYX, SRE, RTN, AGO, CPWR, KND, & CHB. Note that this watchlist was compiled from the previous session’s closing price and does not necessarily reflect pre-mkt activity.

Here’s a brief list of stocks that are currently trading at unusually high or low short-term levels. Stocks that are overbought include: PENX, NAVZ, BRP, COMV, BIDU, CKSW, GLNG, SGTL, CTCH, IMMR, NYX, & DRYS. Stocks that are oversold include: BONT, FINL, ACA, PLCE, LOCM, & ENTU. Watch these stocks for potential continuations or corrections from their current states

Stocks that closed near or at session highs included: SWKS, CME, ICE, DRYS, CKSW, BEAS, EGLE, AL, NYX, ENR, & TRT. Stocks that closed near or at session lows included: CPKI, NOVN, & DECK. Watch these stocks for potential corrections or continuations of yesterday’s action.

Purchases: Ashworth (ASHW 7.17) 10% Owner Ramius Capital Group bought 111,929 shares for $7.15; Directors (2) bought 12K shares for $7.17 and $7.26… Delia’s (DLIA 7.30) CFO bought 5K shares for $7.31… Cyberonics (CYBX 17.08) Director Metropolitan Capital Partners bought 20K shares for $17.34 and $17.60… Navistar Int’l (NAVZ.PK 72.37) 10% Owner Harbert Mgmt bought 90,096 shares for $73.90… Santa Fe Energy Trust (SFF 24.32) Shareholder bought 8K shares for $24.22… Alliance Semiconductor (ALSC.PK 5.75) Director Riley Investment Mgmt bought 29,437 shares for $5.67… Cadiz (CDZI 20.26) 10% Owner Peloton Partners bought 55,931 shares for $19.47… Gray Television (GTN 9.16) 10% Owner Highland Capital Mgmt bought 85,400 shares for $9.22… Macquarie Infrastructure Co. Trust (MIC 41.09) Officer bought 1,500 shares for $41.19; CFO bought 2,500 shares for $40.53; Director bought 5,600 shares for $40.64 … Sales: Brazil Fast Food (BOBS.OB 6.80) Director and 10% Owner sold 15,850 shares at $6.73; Director sold 105K shares at $4.96… Winmark (WINA 19.82) 10% Owner sold 22K shares at $19.48… Financial Federal (FIF 29.52) Officer sold 29,042 shares at $29.59… Epoch Holding (EPHC 13.85) CEO sold 50K shares at $14.05… YTB Int’l (YTBL.PK 4.30) 10% Owner sold 34,300 shares at $4.42… MSM Industrial Direct (MSM 55.50) CEO sold 22,552 shares at $57.21… Penford (PENX 32.50) Officer sold 26,140 shares at $33.39 – $33.40… Layne Christensen (LAYN 42.21) 10% Owner Wynnefield Partners sold 100K shares at $41.06.

Jefferies notes that last night, Brightpoint’s (CELL) distribution partner MOT negatively preannounced Q2 results. They believe the handset market is on track for 14% growth, and strong Nokia (NOK) should offset some of MOT weakness. The firm estimates CELL’s direct distribution relationship with MOT is still less than 15% of total units handled and less than 35% of distribution business. They note that NOK represents nearly 50% of the distribution business… Jefferies also continues to believe that Nam Tai (NTE) will miss the Street’s June qtr projections and potentially even firm’s ests that were revised lower just over a month ago. Firm says NTE generates an estimated 20-30% of sales from MOT through indirect customers such as Sharp, Epson, and GN Netcom, while the handset mkt represents 80-85% of sales… Regarding Flextronics (FLEX), firm believes the co felt MOT’s pain during the June qtr (MOT was more than 10% of sales), which will likely take away upside during the qtr… Thomas Weisel believes MOT’s preannouncement modestly affects Skyworks (SWKS), as the indication that weakness continues to be related to handset sales supports their conviction that suppliers into MOT’s handset business, such as SWKS, are likely to see continued weakness. Thomas Weisel also comments on Multi-Fineline (MFLX), saying the MOT shortfall was even worse than expected, and they lower their estimates on MFLX for the second time in less than a month. TWP also believes MOT’s negative preannouncement affects RF Micro Devices (RFMD), which they think is likely to see continued weakness.

Filings: FCStone (FCSX) files for a common stock shelf offering… Targeted Genetics (TGEN) files for a 13.73 mln share common stock offering by selling shareholders… McMoRan Expl (MMR) files for a $1.5 bln mixed shelf offering… Immunogen (IMGN) files for a $75 mln common stock shelf offering.

Miscellaneous: Jefferies initiates Infinity Pharma (INFI 10.85) with a Buy and sets a $15 tgt, based on experienced management, big pharma partnerships, increasing value of clinical assets while its lead product IPI-504 represents a potential blockbuster opportunity… Susquehanna initiates Spreadtrum Comms (SPRD 15.55) with a Neutral.

KBH KB Home to exit market in Indianapolis – LA Times (35.94 )
LA Times reports KB Home said it would exit the Indianapolis mkt, a decision based on eroding demand from a shrinking population. The home builder said that it would consolidate its Indiana operations with its Chicago office and that layoffs would result. KB Home spokeswoman Caroline Shaw said the co would not disclose the number of job cuts. “It’s a very small division,” she said. “We’re consolidated. We only had small communities in and around Indianapolis.” The co has 139 homes under construction in the Indianapolis area, Shaw said.

Bloomberg.com reports the dollar fell to a record low against the euro and dropped versus the yen on speculation losses on debt backed by U.S. subprime mortgages will spread. Signs a housing slump will deepen led traders to increase bets on a Federal Reserve interest-rate cut, adding to the dollar’s decline. Deutsche Bank AG, which cut its price target on the stock of Nomura Holdings Inc., an investor in U.S. mortgages, said there’s concern earnings may be eroded by losses from subprime loans. Against the euro, the dollar fell to $1.3786 at 10 a.m. in London from $1.3745 late yesterday, after reaching a record low of $1.3794. Against the yen, it was at 122.05 from 122.48. The dollar may fall to $1.41 per euro in the next couple of weeks, Gunner said. The dollar has dropped 1.5 percent in the past three days as Standard & Poor’s and Moody’s Investors Service said they may cut ratings on securities backed by subprime mortgages that are worth billions of dollars, which may increase losses at brokers and hedge funds that made wrong-way bets on the debt. Interest-rate futures today showed traders see a 22 percent chance the Fed will lower borrowing costs by year-end, up from 8 percent a week earlier.

Upgrades: Friedman Billings upgrades Kimco Realty (KIM 38.15) to Outperform from Market Perform and lowers their tgt to $45 from $47, based on valuation… Morgan Stanley upgrades Southern Copper (PCU 105.36) to Equal Weight from Underweight… Morgan Stanley upgrades Century Aluminum (CENX 60.13) to Overweight from Equal Weight. Downgrades: Morgan Stanley downgrades Cleveland Cliffs (CLF 85.59) to Equal Weight from Overweight… CIBC downgrades Gerdau Ameristeel (GNA 14.51) to Sector Perform from Outperform with a $16 tgt following annouced acquisition of Chaparral Steel, and given that Gerdau Ameristeel will now have a much more leveraged balance sheet without a material change to forward earnings… CIBC downgrades Domtar (UFS 10.95) to Underperform from Sector Perform with a $9.50 tgt saying they think that the stock already reflects most (if not all) of the upside that could result from more mill closures. Miscellaneous: Deutsche Bank initiates Dolby (DLB 34.24) with a Buy and a $42 tgt saying due to its leadership position, the upcoming next-generation DVD cycle, growth opportunities in new markets and an attractive valuation…. Deutsche Bank initiates DTS Inc (DTSI 22.77) with a Hold tgt $25… Friedman Billings initiates TradeStation (TRAD 11.67) with an Outperform and a $15.50 tgt saying they believe that TradeStation’s unique platform differentiates the company sufficiently from competitors to provide it with a sustained advantage… J.P Morgan initiates Skilled Healthcare (SKH 15.76) with an Overweight… Jefferies initiates Celgene (CELG 59.28) with a Buy and sets a $77 tgt, as they believe that yet-to-be fully explored ultimate potential of Revlimid and the co’s early pipeline products could provide significant upside to the firm’s current projections… UBS initiates Regions Financial (RF 32.95) with a Neutral and a $37 tgt.

Miscellaneous: Baird initiates U-Store-It Trust (YSI 16.07) with a Neutral and sets a $17 tgt, based on a moderating demand picture, the distraction of on-going disputes and litigation and headwinds facing all REITs… Baird initiates Extra Space Storage (EXR 16.28) with an Outperform and sets a $19 tgt, based on a high-quality portfolio as well as active acquisition and development programs that should result in solid earnings growth of 16% in 2007 and 9% in 2008… Baird initiates Public Storage (PSA 76.55) with a Neutral and sets an $85 tgt, based on valuation and weakness in housing starts and sales as well as questions about consumer spending raise concerns about demand… Stifel Nicolaus initiates Verigy (VRGY 29.45) with a Hold, based on valuation and believe the co has one of the best business models in the semi test industry (dual platform, outsourced manufacturing, strong cash flow, clean balance sheet) and this facet should deliver higher earnings leverage through the cycle vs. its peers… Merrill resumes coverage of DaimlerChrysler (DCX 92.78) with a Neutral.

Upgrades: Morgan Keegan upgrades CommScope (CTV 58.30) to Outperform from Market Perform, as they expect higher ‘07 and ‘08 expectations coupled with accretion from the Andrew acquisition as driving continued appreciation… J.P Morgan upgrades Raytheon (RTN 52.76) to Overweight from Neutral… J.P Morgan upgrades Lockheed Martin (LMT 94.59) to Neutral from Underweight. Downgrades: Wachovia downgrades Safeco (SAF 62.35) to Market Perform from Outperform, based on earnings and returns that are under pressure while key financial metrics including premiums and margins are deteriorating at a faster rate than peers… UBS downgrades Royal Dutch Shell (RDS.A 84.22) to Neutral from Buy… JP Morgan downgrades Emergency Medical Services (EMS 42.38) to Neutral from Overweight… Credit Suisse downgrades AutoZone (AZO 135.50) to Neutral from Outperform based on valuation and saying the macro environment remains challenging that suggests AZO’s outperformance may be capped. Firm says weather trends in key markets such as Texas (12% of stores) were unfavorable in May and June, with rainfall up significantly and average temperatures a few degrees below last year…. J.P Morgan downgrades Northrop Grumman (NOC 76.79) to Neutral from Overweight.

Downgrades: Montgomery downgrades Taleo (TLEO 23.12) to Hold from Buy, based on valuation and Workforce Productivity convergence is a long-term goal, not a short-term opportunity… BofA assumes Jabil Circuit (JBL 23.83) and downgrades to Neutral from Buy and lowers their tgt to $23 from $26, given tempered organic growth, competition, and restructuring, all of which make margin/ROIC targets seem aggressive… JMP Securities downgrades Dendreon (DNDN 7.94) to Market Underperform from Market Perform and sets a $5 tgt, based on an inquiry from the SEC related to Provenge clinical trials, FDA application coupled with SEC filings that reveal certain officers and directors are facing a possible shareholder lawsuit with regard to insider trading activities… RBC downgrades Columbus McKinnon (CMCO 32.68) to Outperform from Top Pick… RBC downgrades Endo Pharma (ENDP 34.70) to Sector Perform from Outperform. Miscellaneous: Deutsche Bank initiates DTS (DTSI 23.42) with a Hold and sets a $25 tgt, based on an optimistic view on the impact of the upcoming DVD upgrade cycle balanced by near-term uncertainty over the Digital Cinema spin-out, timing of the HD DVD/Blu-ray acceleration and valuation… Lehman resumes Community Health Systems (CYH 40.83) with an Overweight and sets a $50 tgt… Lehman initiates Discover Financial Services (DFS 25.21) with an Overweight and sets a $28 tgt.

Miscellaneous: Cantor Fitzgerald initiates Avalon Pharma (AVRX 4.29) with a Buy and sets a $7 tgt, based on drug discovery and development programs targeting four targets, five collaborative partnerships and believe an NDA for AVN944 could be filed by 2011 with FDA approval and launch by 2012… BofA assumes Solectron (SLR 3.77) with a Neutral and sets a $3.90 tgt, based on struggles to deliver top-line growth, improve margins through the years and limited visibility restructuring progress to-date… BofA assumes Plexus (PLXS 24.14) with a Neutral and sets a $24 tgt, based on uncertain demand and a fair valuation despite favorable operating metrics… BofA assumes Benchmark Electronics (BHE 23.18) with a Buy and sets a $29 tgt, based on an improving outlook and believe their track record and low/mid volume, high mix market positioning makes shares a defensive EMS play… BofA assumes Sanmina-SCI (SANM 3.20) with a Neutral and sets a $3.25 tgt, as sluggish end markets have hurt results in recent years and would like to see better growth and sales mix, plus consistent margin and ROIC gains to become more constructive… BofA assumes Flextronics Int’l (FLEX 10.99) with a Buy and sets a $13 tgt, as they believe the proposed acquisition of Solectron is a positive despite SLR’s challenges and better positions the co for Asian competition while they also favor its strong competitive positioning, new programs ramps, and valuation… BofA assumes Celestica (CLS 6.35) with a Neutral and sets a $6 tgt, based on revenue growth that is still subdued, depressed margins, customer risk and execution risk.

Lifetime Brands (LCUT) has entered into a letter of intent to acquire the Gorham, Kirk Stieff, Whiting and Durgin sterling silver businesses from Lenox Group… Command Security Corp (MOC) announces that it has been awarded a new one-year contract to provide security services to a higher education institution with seven locations in the New York City metropolitan area. The contract commences on July 13, 2007 and is valued at approx $600K… FirstService Corp (FSRV) announces that its subsidiary, Colliers Macaulay Nicolls, has completed two important transactions in key emerging mkts that strengthen the size and breadth of its rapidly growing commercial real estate services business… AOL (TWX) announces a partnership with Fidelity National Real Estate Solutions (FNF). Through this agreement, FNF will aggregate broker and M.L.S listings for the 3 mln monthly AOL Real Estate users, and provide access to instant home evaluations through FNFs’ Cyberhomes expert tools at http://realestate.aol.com… The SCO Group (SCOX) announces that Atlas Paper Company has selected SCOX’s new product, Mobile Order as the platform for mobilizing its order entry process on Palm (PALM) Treo 700w smart phones… imeem, a social media network, and Warner Music Group (WMG) announce a strategic partnership focused on creating innovative digital media opportunities by tapping into imeem’s vast online community. Under the terms of the agreement, WMG’s catalog of popular audio and video content will be made available to imeem users in North America for interactive, on-demand streaming on imeem’s free, ad-supported service… e-Future Information Technology (EFUT) announces that the co’s 2007 annual meeting of shareholders will be held on July 24, 2007 at 10:00 a.m., Beijing time… BFC Financial Corp (BFF) announces that it sold 10 mln shares of its Class A Common Stock at a price of $3.40 per share for settlement on July 17, 2007.

Sensex zooms 181pts to close at 15,092 – The Business-Standard.com
The Business-Standard.com reports the Sensex opened with a positive gap of 53 points at 14,964, and zoomed to a high of 15,112 in morning deals. The mood stayed bullish right through the session on buying in power and banking stocks, and the Sensex closed with a gain of 181 points at 15,092.

Asian stocks advance, led by Rio, Posco, on takeovers, metals – Bloomberg.com
Bloomberg.com reports Asian stocks climbed, driving benchmarks in South Korea and Hong Kong to records, on takeover speculation in the metals industry and higher commodity prices. South Korea’s Kospi index jumped 1.1%, closing above 1900 for the first time, while the Hang Seng Index gained 0.9%. All other benchmarks climbed, except in Thailand and Japan, where the Nikkei 225 Stock Average lost 0.4% as the Bank of Japan kept its key interest rate at 0.5%.

European stocks advance, led by BHP Billiton, Xstrata, Nokia – Bloomberg.com
Bloomberg.com reports European stocks rose for the first time in three days, led by BHP Billiton and Xstrata, after Rio Tinto Group’s $38.1 bln purchase of Canada’s Alcan fanned takeover speculation in the industry. National benchmarks rose in 13 of 17 western European markets that were open. The U.K.’s FTSE 100 gained 0.2%. Germany’s DAX added 0.3%. France’s CAC 40 climbed 0.4%. The Stoxx 50 and the Euro Stoxx 50, a measure for the euro region, climbed 0.2%.

The Wall Street Journal reports turmoil in the subprime-mortgage market fanned out yesterday, hitting CDOs that are exposed to this struggling class of home loans. Moody’s Investors Service said yesterday it may cut its credit ratings on slices of 91 CDOs, or about $5 bln of securities. It is a small percentage of the overall CDO market, but still an important development, because it is a signal that subprime fallout is rippling through financial markets to an important class of investments. In another sign of these ripple effects, Fitch Ratings released a report yesterday raising cautionary flags about the commercial real-estate market. It projected rising defaults in this sector after years of increasingly lax lending standards, which could hit bonds backed by commercial real-estate loans.

The Wall Street Journal reports railroad share prices have run up on headline-fueled enthusiasm about the high-profile purchases. Since April, Berkshire Hathaway (BRK.A) has disclosed an 11% stake in Burlington Northern Santa Fe (BNI). Berkshire also has taken smaller but substantial chunks of Union Pacific (UNP) and Norfolk Southern (NSC). Icahn Management LP and activist hedge funds including Atticus Capital LP and Jana Partners LLC have barreled into the railroads, too. That adds up to a healthy long-term outlook for value-oriented investors such as Mr. Buffett. Some hedge funds already are pressuring railroad executives to squeeze more price increases from their customers and take on billions of dollars of debt to ramp up capital spending and buy back shares. “What stands between us and better, safer, less capacity-constrained railroads isn’t activist shareholders. It’s complacent management teams,” complains Snehal Amin, a partner at Children’s Investment Fund Management LLP, a London hedge fund that owns stakes in CSX, Norfolk Southern and Union Pacific. Some skeptics, though, say it will be hard for railroads to deliver significantly higher returns, which will catch up with their lofty share prices.