Gapping up: TRFX +68.1%, CBAK +22.5%, CHU +9.3%, BTE +7.3%, JRJC +7.4%, CEA +7.5%, SLM +5.5%, CHL +4.6%, WEN +3.5%, LDK +3.5%, ALU +3.1%, AMR +2.9%, INFY +2.5%, MU +2.4%, SOLF +2.2%, BCS +1.9%, NOK +1.6%… Gapping down: RAD -5.0%, ZNH -2.8%, SIGM -2.7%, SBUX -2.3%, CMO -2.6%, SAP -1.1%, BSC -1.0%, TSO -0.9%.
Initial Claims 298K vs 316K consensus, prior revised to 313K from 311K
GDP-final 3.8% vs +3.9% consensus
Chain Deflator-final 2.6% vs +2.7% consensus
Personal Consumption +1.4% vs +1.4% consensus
Core PCE q/q +1.4% vs +1.3% consensus
China-related telecoms rise in China on audit news - CNN
CNN reports China-related telecom shares emerged among the biggest gainers of the day, after China’s National Audit Committee said in a statement on Wednesday that the state auditor will look into the books of China’s five major telecoms next month as part of routine procedure. The statement led to speculation that the move could be a precursor to a long-awaited restructuring of the high-growth industry, aimed at industry consolidation. (CHL, CHU, CHA, CN)
NKTR Nektar Therapeutics says NKTR-102 Demonstrates Significant Anti-Tumor Activity and Improved Pharmacokinetic Profile in Preclinical Studies Presented at ECCO
NVLS Novellus: Caris believes NVLS well positioned on all of the key product fronts (26.35 )
Caris notes after recently hosting NVLS mgmt for a series of investor meetings they came away more bullish on their overall thesis for NVLS shares. On the market front firm notes NVLS is well positioned on all of the key product fronts, with the new Vector products starting to gain significant share. Firm note NVLS has the strongest market share within the chip sectors that are showing growth, including Intel (INTC) for PC’s and Toshiba and Samsung for NAND flash. Firm believes potentially large orders from Samsung could provide the swing factor to positive order growth in 4Q.
MDT Medtronic, again questioned over payments to doctors, is subject of Senator’s inquiry - NY Times (56.94 )
NY Times reports an influential senator is raising new questions about payments made to spine surgeons by the co, one of the nation’s largest makers of medical devices. The co has continued to pay doctors mlns of dollars in consulting fees, according to a lawyer representing a whistle-blower involved in the case. Senator Charles E. Grassley, Republican of Iowa, has written to Medtronic, asking the co to explain, among other things, any payments made since the period covered by the settlement. Medtronic defended the continuing payments as legitimate compensation for work the doctors have done. Mr. Grassley, the senior Republican on the Senate Finance Committee, which oversees the federal Medicare program, sent a letter to Medtronic’s chief executive last week, asking the company to explain its payments to the surgeons after 2003. He also asked the company to explain its financing of organizations involved in providing continuing medical education to these doctors.
Insider trading disclosed in filings after the close yesterday
Buyers: Levitt (LEV 2.0 
10% Owner Prescott Group Capital Mgmt bought 231,062 shares at $2.02… Natus Medical (BABY 14.52) 10% Owner D3 Family Canadian Fund, LP bought 36,431 shares at $14.06… Polyone (POL 7.23) Officer bought 6K shares at $7.36… Goodyear Tire & Rubber (GT 30.24) Officer bought 1K shares at $28.82… Sequenom (SQNM 5.99) 10% Owner Lehman Bros. bought 350K shares at $5.25… Genaera (GENR 2.82) 10% Owner Xmark Opportunity Partners bought 55K shares at $2.99… ValueVision Media (VVTV 7.10) Director bought 15K shares at $6.84; CEO bought 50K shares at $7.00… Encore Energy Partners LP (ENP 21.20) bought 5K shares at $20.89… Discovery Holding (DISCB 28.10) Chairman J. Malone bought 76,200 shares at $27.71… ATS (ATCT.OB 3.55) 10% Owner LC Capital Master Fund bought 508,050 shares at $3.41… Ascent Solar Technologies (ASTI 18.00) 10% Owner Quercus Trust bought 45,799 shares at $18.25… Smithfield Foods (SFD 30.54) Director ContiGroup Cos bought 110K shares at $29.96… Sellers: Barr Pharma (BRL 55.87) Director sold 19,968 shares at $54.60… BMB Munai (KAZ 5.47) President sold 25,500 shares at $5.68… Leucadia National (LUK 49.14) CFO sold 120,474 shares at $46.79… China Automotive Systems (CAAS 8.30) Director sold 67,751 shares at $8.39; Officer sold 32,200 shares at $8.34… Salesforce.com (CRM 50.47) Director sold 50K shares at $49.17 - $50.00.
MTN Vail Resorts reports EPS in-line, beats on revs; guides for FY08 (60.24 )
Reports Q4 (Jul) loss of $0.88 per share, in-line with the Reuters Estimates consensus of ($0.88); revenues fell 22.2% year/year to $96.5 mln vs the $93.8 mln consensus. For FY08 co expects full year Resort Reported EBITDA, the combination of Mountain and Lodging segments, to range from $239-249 mln and Resort Reported EBITDA excluding stock-based compensation expense to range from $245-255 mln. The Resort guidance includes a range for Mountain Reported EBITDA of $228-238 mln and Mountain Reported EBITDA excluding stock-based compensation expense of $233-243 mln, while MTN expects Lodging Reported EBITDA to range from $8-14 mln and Lodging Reported EBITDA excluding stock-based compensation expense expected to range from $9-15 mln. Real Estate Reported EBITDA is expected to range from $54-60 mln and Real Estate Reported EBITDA excluding stock-based compensation expense is expected to range from $57-63 mln. Based on current estimates, the company expects net income to range from $112-122 mln and net income excluding stock-based compensation expense to range from $117-127 mln.
JAVA Sun Microsystems: Java for iPhone urged by Sun official - Infoworld.com (5.62 )
Infoworld.com says that The Java platform may run on 2 bln handheld phones, but not on AAPL’s trendy new iPhone. AAPL’s stance was called a mistake by a JAVA executive Wed at the AJAXWorld conference in Santa Clara. “I think it’s a mistake. I think it would provide a lot more flexibility in applications being developed,” for the iPhone, said Bob Brewin, Sun Distingushied Engineer and vice president for software. JavaScript runs on the phone and someone will put Java on the iPhone, Brewin said. But by not having it on there now, iPhone users and Java developers are being shortchanged, according to Brewin. Current Java applications, such as the LimeWire media-sharing application, could be easily ported and developers could choose the Java language for building new programs for the iPhone, he said. There also could be a lot of Java-based games made to work on the device, Brewin said. He attributed Apple’s stance to the company wanting developers to develop for only a small set of A.P.I. AAPL representatives could not be immediately reached for comment Wed afternoon, but AAPL CEO Steve Jobs has been dismissive of having Java run on the iPhone.
KBH KB Home reports Q3 (Aug) results, misses on revs (24.09 )
Reports Q3 (Aug) loss of $6.19 per share, includes non-cash charges of $690.1 mln related to inventory and joint venture impairments and the abandonment of land option contracts, and includes $107.9 mln related to goodwill impairment, may not be comparable to the Reuters Estimates consensus of ($0.71); revenues fell 32.4% year/year to $1.54 bln vs the $1.59 bln consensus. CEO says, “The oversupply of unsold new and resale homes and downward pressure on new home values has worsened in many of our markets as tighter lending standards, low affordability and greater buyer caution suppress demand, while higher foreclosure activity combined with heightened builder and investor efforts to monetize their real estate investments boost supply. The negative impact of these conditions on our selling prices and gross margins prompted us to take substantial write-downs of inventory and goodwill in the third quarter. At this time, we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins. We expect housing industry conditions to continue to worsen through the end of the year and into 2008. Rising foreclosure rates are intensifying the problem of surplus inventory and will likely drive further home price reductions.”
Wachovia believes that Orthofix’s (OFIX 47.79) Breg and Vascular Businesses could be viewed as “non-core”, and if OFIX were to exit some or all of these businesses, it could result in better revenue growth, EPS growth, and margins (over the longer run) as well as freeing up cash that could be used to retire debt or fund additional acquisitions… Merriman notes that Progressive Gaming’s (PGIC 4.7 definitive agreement with Shuffle Master (SHFL) announced yesterday provides for approximately $23 mln in upfront proceeds to PGIC as well as two recurring revenue streams — with an estimated combined net present value of $37-47 mln. This valuation is in-line with the firm’s original estimate of $45 mln as well as their more recent range of $40-60 mln, including recurring revenue streams. They believe some valuation estimates by other sell-side firms for the table games division were as low as $27 mln. Firm maintains their ests… In a note out yesterday afternoon, Oppenheimer commented on speculation in the WSJ that Mattel (MAT 23.40) is a potential acquiror of Build-a-Bear (BBW 16.75). The firm notes that MAT’s management is adamant that retailing is outside its core competencies, and that it will not become a retailer. They believe MAT’s acquisition of BBW is highly unlikely, but if it were to occur, it appears to be an accretive deal for MAT.
INFY Infosys gains on speculation it may raise forecast - Bloomberg.com (47.30 )
Bloomberg.com reports that INFY, India’s second-largest computer-services provider, posted its biggest gain in more than six months on speculation that it may raise its earnings forecast under U.S. accounting rules. “It won’t be surprising at all for us if Infosys revises its dollar guidance upwards,” Suveer Chainani, an analyst at Macquarie Securities Ltd., said in an interview. He rates the stock as “outperform.” “The demand environment remains quite strong.” Infosys today rose 4.8% to 1,911.75 rupees at the close of trading on the Bombay Stock Exchange.
SBUX Starbucks and PepsiCo announce a Multi-Country Deal (27.69 ) -Update-
Starbucks (SBUX) and PepsiCo (PEP) announced today they are expanding their relationship beyond North America. The first market to benefit from the expanded relationship outside of North America will be China. There are currently more than 540 Starbucks stores operating in Greater China.
Wachovia gives overview of the brokers’ marks and credit exposure
Wachovia notes that leverage loan commitments for the August reporting brokers declined 37% from 2Q07, led by a 64% decline by BSC (BSC). They note that GS pulled back the least, with commitments down 17% from last quarter. At the end of the quarter, LEH still had the most exposure, followed by GS, at 143% and 133% of equity capital, respectively. The firm does not expect losses anywhere near the marks taken in Q3, as they believe a more likely scenario is for no real markdowns in Q4, with a small possibility of gain recognition. They think mortgages and loan marks unlikely to be repeated, and say that LEH appears the most exposed to mortgages and leverage loans.
GMTN Gander Mountain initiated with a Sell at Nollenberger; tgt $5 (5.74 )
Nollenberger initiates GMTN with a Sell and $5 tgt as firm believes near-term expectations could prove overly optimistic given the ongoing costs associated with building out this platform. Specifically, they expect the co’s strategic initiatives to expand its product offering and that the sales channel could present challenges over the next couple of quarters as they are integrated into the business model.
JRJC China Finance Online tgt upped to $35 at Brean Murray (35.20 ) -Update-
Brean Murray raises their JRJC tgt to $35 from $25 as they see continued strength in the co’s core software subscription business, and contributions from incremental accretive acquisitions should provide upside in the long run, although near-term share price volatility will likely increase and a meaningful correction may be necessary, given the recent run-up.
DTV DIRECTV expect solid results in Q3 - Wachovia (24.14 )
Wachovia expects Q3 net subscriber additions to be 164K (-1% YoY), in-line with consensus forecast (169K). Firm estimates churn will be at 1.70% in-line with consensus and modestly better than Q3’06’s 1.80% result. They expects Q3 ARPU to increase +5.7% to $76.88 driving Q3 DTV US revenue to $3.78B (+11% YoY) in-line with consensus. The firm’s new Q3 DTV US EBITDA estimate is at $965M (+17%), moderately above consensus of $932M (+13%). They are modestly reducing their Q3 operating cash flow forecast from $1.107B (+24% growth) to $1.045B (+17%), which is still above consensus of $1.02B (+14%). Wachovia continues to believe DTV shares appear poised to rise materially amid likely continued solid subscriber growth, an inexpensive valuation, a healthy ramp in 2008 free cash flow and a new aggressive 40% shareholder in Q4.
Miscellaneous: JP Morgan initiates InterMune (ITMN 19.39) with an Overweight… William Blair initates Medco Health (MHS 88.3 with an Outperform… Bernstein initiates Capital One (COF 66.10) and U.S. Bancorp (USB 32.32) with Outperform; COF has tgt of $94 and USB has tgt of $41… Wachovia initiates Aetna (AET 53.25), Cigna (CI 53.50) and Health Net (HNT 54.95) with Outperform… Hearing tier one firm initiates Sirf Technology (SIRF 19.49) with Neutral and $19 tgt… Hearing tier one firm initiates Zoran (ZRAN 20.37) and Trident Microsystems (TRID 14.97) with Buys… ThinkEquity initiates Neurogen (NRGN 4.74) with a Buy and a tgt of $10… ThinkEquity initiates Neurocrine Bioscience (NBIX 10.01) with a Buy and tgt of $15… Upgrades: Lehman Brothers upgrades SAVVIS Communications (SVVS 37.50) to Overweight from Equalweight… Hearing tier one firm upgrades Campbel Soup (CPB 36.67) to Neutral… Downgrades: Hearing tier one firm downgrading Brinker (EAT 28.10) to Sell.
SIRF SiRF Technology: Upgrade details (19.49 )
Credit Suisse upgraded SIRF and raised their tgt to $24 from $18.50. The firm cites checks at electronics retailers indicating a strong holiday GPS build and early indications of healthy sell-through, lower than expected near-term share loss for SIRF in PNDs, and near-term traction for SIRF in the wireless space, specifically the potential for revenue from Motorola (MOT) handsets as reason for the upgrade.
WEN Wendy’s franchise owner making bid for the hamburger chain - Chicagotribune.com (33.63 )
Chicagotribune.com reports that the owner of 134 Wendy’s restaurants wants to make a bid for the nation’s No 3 hamburger chain with two private-equity firms. David Karam, president of Cedar Enterprises, said Wednesday that he and his partners have been invited by WEN’s International to a second round of talks. He is backed by Kelso & Co. and Oak Hill Capital Partners. “I’ve been involved in the brand,” he said. “I see the great potential of it.” Karam’s first-round proposal was enough to garner entry into a second round next month, where bids are expected. He would not disclose how much he is willing to pay for WEN’s, but said the co’s current stock price is rich. Billionaire investor Nelson Peltz has said his co, Triarc Cos., is prepared to offer $37-$41 per share for WEN’s in a deal that would peg WEN’s total value between $3.2 bln and $3.6 bln.
New players reshape wireless Germany - WSJ
WSJ reports prices for mobile-phone calls are falling fast in Germany, threatening to introduce an era of slim profits for carriers in a country that is among the world’s slowest to embrace wireless technology. Deutsche Telekom’s T-Mobile (DT) unit and the United Kingdom’s Vodafone (VOD) enjoyed a virtual duopoly in Europe’s largest economy. Now the landscape is changing as the country’s No. 3 and No. 4 wireless carriers, bidding for mkt share, aggressively court customers with lower prices. O2, a mobile unit of Spain’s Telefonica (TEF) and the No. 4 player in Germany, raised the ante this month by launching a discount brand. Many of the competing brands have been unleashed in the past two years by E-Plus, a unit of the Netherlands’ KPN and Germany’s No. 3 wireless carrier. Falling prices are prompting Germans to spend more time on their cellphones but T-Mobile, Vodafone and O2 each have suffered revenue drops in recent quarters in Germany. T-Mobile and Vodafone also face a tougher playing field after German regulators late last year reduced the “termination fees” that rivals pay the big carriers to complete wireless calls on their networks
Bond Watch: Finding Buyers
The market has flipped higher in the last hour as trade positions ahead of what is expected to be another batch of bad housing data. Despite a global push back into equities overnight, bonds are still finding takers at current levels. The 2-10-yr yield spread pushed out to 64.3 as curve trade continues to throw down steepeners on the slowing economy & the potential for further rate cuts. Bond prices in the EuroZone are posting gains now despite stocks perking up while in Japan, the bonds have not responded in-kind to the global tendency higher as BOJ official talk hinted at raising rates. Treasuries at least have some data to keep them amused today along with a $13B 5-yr note auction. Trade has been consolidating all week as bonds buy time to figure out which direction the Fed is most likely to follow in Oct. Data have been mostly inline to bad & equities continue to trade like another cut is coming. Bonds, however, are a little less optimistic as each suggestion of another cut brings an equal dose inflation fears, weighing on the long end. Eyes are already shifting out to next week’s payrolls report as the best jumping off point. The buck was unable to muster up much of a relief rally as it continues lose the battle below 1.4115. The latest failed attempt has seen the euro climb to fresh lifetime highs above 1.4175. Gold is now 734.61 (+5.81) while crude is 81.29 (-0.99). Data has final Q2 GDP, initial jobless claims (8:30) along with new home sales (10). Rumors, as with used home sales are running at -10%, but like that number, it seems unlikley. New Fed-sters Rosegren (Boston) & Evans (Chicago) talk early while chief Bernanke goes at 13. The euro is at 1.4183 & the yen is at 115.1700 while the 10-yr is +07/32nds yielding 4.593%
BBBY Bed Bath & Beyond: Color on qtr (33.83 )
CIBC says that as they expected, BBBY’s comparable-store sales gain of 2.2% beat their est for 1.5%. On a 2-yr average basis, they say this represents a modest uptick from the trend back in 1Q. This is consistent with their view that BBBY probably regained some share even though the whole sector was still weak. They say that in the rest of the yr, BBBY will be entering Canada with one store. They believe that Canada will be an attractive mkt especially in Ontario and BC. Mgmt indicates that it will be accelerating Christmas Tree Shops and Buy Buy Baby store growth. They do not believe it will be a major acceleration, but this does reflect a slight change in tone, which they feel is positive… Oppenheimer says that guidance for 3Q/F07 points toward a drop in net income. Even so, given the challenging environment, the firm says BBBY deserves credit for achieving relative earnings stability. That they say, along with an additional $1 bln share repurchase authorization should provide further inducement for value investors to consider riding out a storm with BBBY shares. Although the EPS report might be the catalyst for the stock to rally, they believe the upside potential might be limited to about $40 until the economic horizon brightens.
SBUX Starbucks: Downgrade details (27.69 )
BofA downgrades SBUX to Sell from Neutral and a $23 tgt. They believe that with slower growth continuing in fiscal 2008 and risk to estimates due to internal and external operating challenges, the stock and valuation may be under pressure. Although they believe that the co controls a very strong brand and can continue to grow, they believe the pace of growth will be slower (with international business still too small to make significant contribution to operating profits - and could be several years away from such a contribution) and that expectations are too high for a short-term recovery.
Dollar sets another record low vs euro, more seen - Reuters
Reuters reports the dollar fell to a new record low against the euro for a sixth successive session on Thursday, as investors braced for more economic reports that could reinforce expectations of another U.S. interest rates cut in October. Fed funds futures show the chance of an October rate cut is down to about 84% from a high of 92% helped by steadier equity mkts this week.
Upgrades: Bear Stearns upgrades KKR Financial Holdings (KFN 16.44) to Outperform from Peer Perform… Credit Suisse upgrades Sirf Technology (SIRF 19.49) to Outperform from Neutral and raises their tgt to $24 from $18.50… RBC upgrades RightNow Technologies (RNOW 15.82) to Sector Perform from Underperform and increases tgt to $17 from $14… Keefe, Bruyette & Woods upgrades Oriental Financial (OFG 11.26) to Outperform from Market Perform and increases their tgt to $14 from $12… Downgrades: Bear Stearns downgrades Alesco Financial (AFN 4.97) to Peer Perform from Outperform… Credit Suisse downgrades Statoil (STO 33.50) to Neutral from Outperform… Hearing tier one firm downgrades Tyco (TYC 44.84) to Sell from Neutral… Miscellaneous: Hearing tier one firm adds Emerson (EMR 51.57) to Buy List…
TSO Tesoro Petroleum: Q3 EPS est cut to $0.95 from $2.22; Refiners likely to be below expectations - FBR (49.70 )
Friedman Billings cuts their tgt on TSO to $0.95 from $2.33. Firm says that their refining margin indicators have been very volatile, suggesting a $15.80/bbl. Firms regional analysis suggests that Midwest margins remained fairly robust, while West Coast margins showed the greatest year-over-year decline. Updating their 3Q07 earnings estimates puts us 20% below consensus expectations, on average, with TSO seen as having the greatest potential downside. Firm also cuts estimates on HOC, SUN, FTO, and VLO. Outperform-rated VLO and SUN are their top recommendations.
ECB loans emergency 3.9 bln Euros, most since ‘04 - Bloomberg
Bloomberg reports the European Central Bank loaned the most money at its penalty interest rate in almost three years as policy makers struggle to push down mkt borrowing costs. The ECB loaned 3.9 bln euros ($5.5 bln) at its marginal lending rate of 5% yesterday, the most since October 2004, the Frankfurt-based central bank said today. It didn’t provide details on who asked for the money.
JRJC China Finance Online profiled in New America section of IBD (33.93 )
JRJC a new mgmt team is pushing to turn its 7.3 mln registered users into paying subscribers. So far, it’s working. The co followed several lackluster earnings reports with two straight quarters of triple-digit sales and revenue growth. Subscription revenue, rather than advertising sales, deserve the credit. The co grew its registered users by 11% in the three months that ended in June. Advertising revenue grew 60%, to $396,000. The co serves information-hungry investors in a sizzling mkt. Chinese regulators say more investors are jumping into the mkt. Analysts surveyed by Thomson Financial think the co can make 42 cents per ADR this year and 90 cents next year. And it has room to grow. The most obvious red flag is the co’s close ties to the fate of the Chinese stock mkt.
AMR FL Group urges American Airlines to consider all options to enhance shareholder value (21.77 ) -Update-
FL Group confirms it has written to the Board of Directors of co on Tuesday urging them to immediately consider strategic alternatives that would significantly increase shareholder value. These include the separation of American Airlines’ frequent flyer loyalty program, AAdvantage, the world’s oldest and largest frequent flyer program, from the main business. Based on publicly available information, FL Group has performed a conservative analysis of AMR’s business units and believes there is significant hidden shareholder value to be unlocked. In particular, FL Group believes that unbundling AMR’s AAdvantage Frequent Flyer program could increase shareholder value by more than $4 bln.
ZLC Zale announces agreement to sell Bailey Banks & Biddle for $200 mln (23.59 ) -Update-
Co announced that it has entered into a definitive agreement to sell its Bailey Banks & Biddle brand to Finlay Fine Jewelry (FNLY) for a purchase price of $200 mln, subject to closing adjustments. The transaction is subject to customary closing conditions and is expected to be completed pre-Holiday. The Company will provide information regarding the anticipated post-sale impact of this transaction on its future financial results at a later date. Goldman Sachs & Co. advised Zale on this transaction.
NKTR Nektar Therapeutics says NKTR-102 demonstrates significant anti-tumor activity and improved Pharmacokinetic profile in preclinical studies presented at ECCO (9.12 )
Co announces positive new preclinical data today regarding its proprietary product candidate, NKTR-102, which is under development for the treatment of solid tumors. NKTR-102 substantially suppressed tumor growth in an irinotecan-resistant mouse colorectal tumor model, while irinotecan-treated groups did not show a statistically significant decrease in tumor growth compared to controls. The studies also demonstrate that administration of NKTR-102 results in a significantly improved pharmacokinetic profile for the active metabolite of irinotecan as compared to treatment with irinotecan. “The results show that NKTR-102 demonstrated statistically significant dose-related suppression of tumor growth in an irinotecan-resistant mouse xenograft model. Further, NKTR-102 displays extended and unique pharmacokinetics which results in greater and sustained exposure to both irinotecan and its active metabolite.”
Downgrades: CNOOC (CEO 159.6 downgraded to Neutral from Buy at tier-1 firm… UBS downgrades GameStop (GME 58.7 to Neutral from Buy… UBS downgrades ResMed (RMD 43.66) to Neutral from Buy… BofA downgrades Starbucks (SBUX 27.69) to Sell from Neutral… Morgan Stanley downgrades Embarq (EQ 59.77) to Underweight from Equal-weight… Upgrades: Bear Stearns upgrades Prudential plc (PUK 29.74) to Outperform from Peer Perform. CIBC upgrades Magna International (MGA 95.75) to Outperform from Sector Perform and raises their tgt to $114 from $78 as firm notes the impact from recent cost reduction initiatives and program launches has been larger than initially anticipated… Miscelaneous: CIBC initiates Lev Pharma (LEVP 1.52) with Outperform and $3 tgt as they believe Cinryze, LEVP’s C1 esterase inhibitor (C1-INH), will likely be approved in 1Q08 for treatment of hereditary angioedema, a small, Orphan indication… Friedman Billings initates MGI Pharma (MOGN 26.51) with Outperform and $34 tgt as the co has three drivers that should propel total revs above $900 mlnby 2010, more than double the current level.
Upgrades: Wachovia upgrades Kindred Healthcare (KND 17.87) to Market Perform from Underperform, as they believe shares are fairly priced given the ongoing Medicare risk and expect growth to improve over time due to the opening of new LTCHs, conversion of unused LTCH beds to nursing home beds to increase facility utilizations, the addition of new nursing homes and an increased ability to upgrade nursing facilities in light of a new rent agreement with Ventas… Baird upgrades Westell Technologies (WSTL 2.1 to Outperform from Neutral and maintains their $3 tgt, as they believe the new CEO is making the right strategic decisions to position the co better within its core markets over the long term and while they don’t expect substantial margin improvements in the near term, FY09 could be meaningfully better than current expectations, in their view… Miscellaneous: Broadpoint Capital initiates Pharmacopeia (PCOP 5.59) with a Buy and sets a $9 tgt, based on its lead proprietary drug now in a Phase IIa study in hypertension which could become the first of a new class of drugs for hypertension and may have particularly attractive properties for the 5.4 mln people with concomitant diabetic nephropathy.
Upgrades: Rochdale upgrades Wal-Mart (WMT 43.30) to Buy from Hold and raises their tgt to $55 from $39, based on valuation and see an improved outlook for margin, ROIC and same store sales… Miscellaneous: SunTrust initiates Tibco Software (TIBX 7.46) with a Neutral, based on concerns over inconsistent performance in license revenues and questions around the co’s long-term growth profile… Wachovia initiates Aetna (AET 53.25) with an Outperform, as they expect Aetna to continue to generate the strongest top-line growth and EPS growth while product and geographic expansion in the commercial business as well as forays into Medicare and Medicaid should lead to sustained EPS growth… Wachovia initiates Cigna (CI 53.50) with a Market Perform, as they expect EPS growth to slow based on commercial enrollment growth slowing and only a limited push into Medicare and Medicaid… Wachovia initiates Health Net (HNT 54.95) with a Market Perform, as they think the co’s turnaround is in its late stages and see only modest upside potential to ‘07E and ‘08E EPS.
Sensex up 204pts - The Business Standard
The Business Standard reports the Sensex is now up 204 points at 17,125. The index opened with a positive gap of 139 points at 17,060, and soon surged to a high of 17,158… The NSE Nifty today crossed the 5000-mark for the first time ever. It is now up 55 points at 4995.
Asian stocks rise to record; Sony gains, Hang Seng tops 27,000 - Bloomberg.com
Bloomberg.com reports Asian stocks advanced, driving Hong Kong’s Hang Seng Index above 27,000 for the first time, on speculation the U.S. will cut interest rates and China will award new mobile-phone licenses… Kong’s Hang Seng climbed 2.4% to 27,065.15, after trading was suspended yesterday for a holiday. Benchmarks also reached records in Australia, India and Singapore. Japan’s Nikkei 225 Stock Average rose 2.4%, its first three-day rally since the period ended Aug. 9… South Korea’s Kospi index climbed 1.4% following a three-day holiday. Other markets open for trading rose, except for Thailand, New Zealand and Sri Lanka.
Global stocks, U.S. futures rise; DSM, China Telecom advance - Bloomberg.com
Bloomberg.com reports stocks in Europe and Asia climbed on speculation a U.S. home sales report today will give the Federal Reserve more room to cut interest rates. Standard & Poor’s 500 Index futures rose… Europe’s Dow Jones Stoxx 600 Index added 0.7% to 377.59. National benchmarks increased in all of the western European markets except for Iceland. France’s CAC 40 and Germany’s DAX gained 0.6%. The U.K.’s FTSE 100 climbed 0.7%.
MSFT Microsoft’s “Halo 3” registers biggest day in US entertainment history with $170 mln in sales (29.50 )
Co announced that the Xbox 360 exclusive game “Halo 3″ has officially become the biggest entertainment launch in history, garnering an estimated $170 mln in sales in the United States alone in the first 24 hours. The Xbox 360 title beat previous records set by blockbuster theatrical releases like “Spider-man 3″ and novels such as “Harry Potter and the Deathly Hallows.” Bob McKenzie, Senior Vice President of Merchandising for GameStop (GME) Corp commented that, “With consumer demand for Halo 3 and related products, we expect it to be the biggest video game title generator in GameStop’s history.”
COP ConocoPhillips eyes sale of China onshore gas field - Reuters (87.30 )
Reuters reports ConocoPhillips (COP) is looking to sell a gas field in China’s southwestern Sichuan province, a co spokesman said on Thursday, although it only acquired the asset last year. The co has a 100% working interest in the 295,000 acre Chuan Zhong Block, which holds the Ba Jiao Chang gas field. The block operator is ConocoPhillips unit Burlington Resources. “We are in the process of marketing the asset, but have not yet concluded a sale,” a co spokesman said. He declined to comment further.
KO Coca-Cola Amatil says Coca-Cola to trim stake - Reuters (57.35 )
Reuters reports Australian soft drinks maker Coca-Cola Amatil Ltd said on Thursday Coca-Cola (KO) plans to sell a stake of about 2.4% in Amatil to buy a stake in Amatil’s former South Korean business. Coca-Cola Co will sell about 18 mln Amatil shares through a book build process to start on Thursday, after the market close. The U.S. firm currently has 32% of Amatil. At Thursday’s closing price of A$9.25, the stake would be worth A$166.5 mln ($146 mln). Coca-Cola Amatil sold its South Korean business to LG Household & Health Care in July for A$520-A$545 mln ($458-$480 mln). LG said soon after that it hoped to sell some of the shares to Coca-Cola, and that it had sought Coca-Cola’s participation from the initial stage of its interest in the South Korean business. Coca-Cola Co said in a statement the funds from the sale will be used to acquire a 10% stake in the Korean business, as well as to fund other growth opportunities in the region.
GM After GM’s labor pact, it’s time to kick the tires - WSJ (37.64 )
The Wall Street Journal reports now that GM (GM) has placed its retiree-health issues with the UAW, the co’s basic operations will get more attention, and that might weigh on the stock. GM will need to improve the quality of its vehicles, and sell more of them, a challenge amid a competitive market. With oil prices around $80 a barrel the challenge could be even greater. The agreement does help level the playing field among auto makers, likely helping the U.S. auto makers better compete globally. But one large auto investor quipped that “the bad news is now people will focus on quality” — an allusion to the gap that is still seen between GM and other domestic auto makers. “Even if this goes through, unit labor costs are higher than foreign competitors” says David Dreman, head of value-oriented Dreman Value Management. Some even suggest that GM could be a takeover candidate. But GM’s $39 bln of debt is more than twice the value of its shares, which likely would scare off potential buyers. And bears on the stock note that GM will have to fund the health-care fund, which is expected to be worth more than $35 bln, with a combination of cash and securities.
AMR Iceland fund puts heat on AMR - WSJ (21.77 )
The Wall Street Journal reports FL Group, a $6 bln investment fund from Reykjavik, Iceland, sent a letter to the American Airlines (AMR) parent’s board on Tuesday urging the co to consider alternatives, including the spinoff of its AAdvantage frequent-flier program, to boost a stock that has fallen almost 50% since January. FL Group said in the letter it has accumulated an 8.3% stake in the carrier. Previously, it had disclosed a stake of less than 6%. FL Group says AAdvantage is worth about $6 bln. That is greater than the $5.4 bln market cap of all of AMR. “It’s a no-brainer,” said Hannes Smarason, chief executive of FL, in an interview. He also said AMR should consider offloading its aircraft-maintenance and -repair unit and its American Eagle regional airline. “It’s a tough environment for the airlines now, and it’s incumbent on the management and the board to find avenues where value can be created.” The fund has tried quietly engaging the co’s management, but “we’re not getting the response we’re looking for.” An AMR spokesman said the co values input from shareholders. It declined to comment on specifics about FL, saying it typically doesn’t comment on communications with holders. He added: “Our board and our senior management regularly give careful consideration to the best use of our strategic assets and the impact that those decisions might have in the long run for our shareholders.”
‘Mad Money’ Recap: Lightning Round cont. - TheStreet.com
Cramer was bearish on Navteq (NVT), Garmin (GRMN), Urban Outfitters (URBN), Western Union (WU), Nastech (NSTK), Citigroup (C) and Sears (SHLD).
Mad Money’ Recap: Lightning Round - TheStreet.com
Cramer was bullish on Excel Maritime (EXM), Companhia Vale do Rio Doce (RIO), Range Resources (RRC), Quicksilver Resources (KWK), Rosetta Resources (ROSE), XTO Energy (XTO) and Celgene (CELG).
Cramer’s ‘Mad Money’ Recap - TheStreet.com
On Wednesday’s edition, Jim recommends Gardner Denver (GDI). The parts Gardner Denver makes can also be used to clean up industrial waste, so it isn’t a pure oil play but ought to benefit when oil prices rebound. Because a large proportion of its international earnings come from the European Union, Gardner Denver makes money abroad that will convert to dollars at a generous rate. It’s also cheaper compared to peers. Next, he claims there will be more acquisitions in the Canadian energy trust space and thus recommends Baytex Energy (BTE). He cites Abu Dhabi National Energy’s deal to buy PrimeWest (PWI). During the “Sudden Death” segment, Cramer was bullish on Life Partners Holdings (LPHI) and Danaher (DHR).
After Hours Summary: BBBY up 2.3% on earnings; SLM up 5.5% (Flowers Group open to renegotiating Sallie Mae deal, according to source — DJ)Companies moving in after hours trading in reaction to earnings: Trading Up: BBBY +2.5%… Trading Down: XRTX -5.6%; PAYX -2.7%… Trading Up: SIGA +12.2% (ST-246 completely prevents mortality in Symptomatic Orthopox Virus infected primates); GSIG +8.4% (raises Q3 guidance); SLM +5.5% (Flowers Group open to renegotiating Sallie Mae deal, according to source — DJ); SWSI +5.0% (Superior Well Services will replace Neoware in the S&P SmallCap 600); GYI +3.4% (Getty Images will replace Greater Bay Bancorp in the S&P MidCap 400); DRE +2.7% (S&P REIT Composite constituent Duke Realty will replace AG Edwards in the S&P MidCap 400); CPO +2.6% (Corn Products International will replace Catalina Marketing in the S&P MidCap 400); GLS +1.9% (signs agreement to acquire eight narrow-body aircraft); AVAV +1.9% (reaffirms FY08 revs guidance, below consensus; Co also awarded contract valued at ~$57 mln); WOR +1.7% (Announces 10 mln share repurchase authorization); ISTA +1.3% (expands its pipeline in allergy treatments; acquires exclusive N. American rights to bepotastine for nasal allergy); TEC +1.1% (announces sale of a portion of its Piceance Basin Asset for $33 mln in cash plus DJ Basin production and acreage); SAM +1.0% (Beer will replace Playtex Products in the S&P SmallCap 600).
Standard & Poor’s announces changes to U.S. Indices
S&P REIT Composite constituent Duke Realty (DRE) will replace AG Edwards (AGE) in the S&P MidCap 400 after the close of trading on Friday, September 28. AG Edwards is being acquired by S&P 100 and 500 constituent Wachovia (WB) in a deal expected to close on or about that date, pending final approvals. S&P SmallCap 600 constituent Corn Products International (CPO) will replace Catalina Marketing (POS) in the S&P MidCap 400 and Buffalo Wild Wings (BWLD) will replace Corn Products International in the S&P SmallCap 600 after the close of trading on Monday, October 1. Catalina is being acquired by Hellman & Friedman LLC in a deal expected to close on or about that date, pending final approvals. Getty Images (GYI) will replace Greater Bay Bancorp (GBBK) in the S&P MidCap 400 after the close of trading on a date to be announced. Greater Bay is being acquired by S&P 100 and 500 constituent Wells Fargo (WFC) in a deal still pending final approvals. Superior Well Services (SWSI) will replace Neoware (NWRE) in the S&P SmallCap 600 after the close of trading on Friday, September 28. Neoware is being acquired by S&P 100 and 500 constituent Hewlett-Packard (HPQ) in a deal expected to close on or about that date, pending final approvals. Boston Beer (SAM) will replace Playtex Products (PYX) in the S&P SmallCap 600 after the close of trading on Friday, September 28. Playtex is being acquired by S&P MidCap 400 constituent Energizer Holdings (ENR) in a deal still pending final approvals. Cogdell Spencer (CSA) will replace Republic Property Trust (RPB) in the S&P REIT Composite after the close of trading on a date to be announced. Republic Property is being acquired by S&P MidCap 400 and REIT Composite constituent Liberty Property Trust (LRY) in a deal still pending final approvals.
BBBY Bed Bath & Beyond beats by $0.03, reports revs in-line; Board of Directors authorizes a new $1 bln share repurchase program (33.83 +0.63) Reports Q2 (Aug) earnings of $0.55 per share, $0.03 better than the Reuters Estimates consensus of $0.52; revenues rose 10.0% year/year to $1.77 bln vs the $1.77 bln consensus.
