Fitch Ratings upgraded the issuer default ratings of Allegheny Energy Inc. (AYE-$64.21) and its subsidiary, Allegheny Energy Supply Co. one notch, to BBB- from BB+. The hike reflects credit improvement resulting from increases in cash flow from higher realized prices on power sales as well as lower debt balances and associated carrying costs, according to Fitch. The outlook on the ratings is stable.Friday, after the bell, Ashworth, Inc. (ASHW-$2.64), a designer of golf-inspired sports apparel, posted a net loss that narrowed to $3.49 million in the fourth-quarter, from $4.36 million in the prior year quarter, on higher revenues. The company also announced a new management team led by CEO Allan Fletcher.
Psychiatric drugs like Seroque and Zyprexa, manufactured by AstraZeneca plc (AZN-$43.12) and Eli Lilly (LLY-$54.05), respectively, could be next on the list for reimbursement restrictions based on comparative effectiveness data, according to insurance policy analysts.
Bayer AG (BAYRY-$91.40) and Johnson & Johnson’s (JNJ-$67.38) new oral Factor Xa anticoagulant, rivaroxaban, has shown superiority over Sanofi-Aventis’ Lovenox (enoxaparin), but the agent is still under close watch for potential liver toxicity concerns, according to physicians interviewed by Pharmawire.
Berkshire Hathaway Inc (BRK.A-$141,100.00) is starting a bond insurer that would help state and local governments lower their borrowing costs, and is likely to lure business from established rivals, MBIA Inc (MBI-$18.74) and Ambac Financial Group Inc (ABK-25.12), struggling with credit market turmoil.
On CNBC's Stop Trading, Jim Cramer, discussed Citigroup (C-$29.29), saying it may be a smart buy now. Cramer said there is about $4 of downside in Citibank, which assumes a dividend cut.
Walter Pritchard, the infrastructure software analyst for Cowen, after talking with 900 people involved with technology purchases, concluded that Citrix Systems (CTXS-$37.90), a global leader in application delivery infrastructure, is at a high risk to a tech spending slowdown, according to a recent interview in Barron’s.
Piper Jaffray lowered its price target on premium handbag and accessories retailer Coach, Inc. (COH-$30.47) from $36 to $32 a share, citing a soft Holiday environment.
Income-oriented investors salivate at the 8% dividend offered by Diana Shipping (DSX-$32.45), but in the long term this will be difficult to sustain, according to TheStreet.com research analysts. The drybulk shipper uses roughly all of its free cash flow to pay the $2.32 dividend, which is more than 100% of its net income over the past 12 months. The dividend is currently secure through 2008, but any downturn in fundamentals or disruption in growth in China will lead to dividend cut.
Zacks senior mining analyst Paul Raman, CFA, maintains a BUY rating to mining major Freeport-McMoRan Copper & Gold, Inc. (FCX-$104.55). The second largest copper producer is witnessing strong growth backed by improved productivity and a strong cash flow position. A rise in the prices of copper and gold lead Raman to raise his six-month target price to $125 a share, 12.4 times 2007 EPS estimates.
SmartMoney columnist Jack Hough insists that now might be an especially good time to purchase the stock of Hasbro (HAS-$25.91). Wall Street is decidedly down on the nation's No. 2 toy maker's stock; eight of 10 analysts who cover it give it a Hold rating. Shares have lost 15% since summer. They trade at just 13 times forecast 2007 earnings, a discount of about a quarter to the S&P 500. Yet the main worry surrounding Hasbro seems to be that its 2007 performance was so strong that it will be difficult to improve upon in 2008. According to Hough, that's hardly a reason to abandon the shares, particularly since Hasbro seems stronger, more stable and more profitable than it has been in more than a decade.
When Immucor (BLUD-$33.86), the leading provider of automated instruments and reagents for blood typing and screening to U.S. clinical labs, reports earnings on Wednesday after the close, traders will be watching for $0.24 EPS.
Legg Mason Inc. (LM-$71.23), the Baltimore, Maryland-based global asset management firm, said Friday that it has taken action to reduce asset-backed commercial paper in two non-us liquidity funds.
After the bell, LJ International (JADE-$3.47) said net income for the six months ending June 30 climbed to $1.83 million, or 8 cents a share, versus $952,000, or 5 cents a share, a year earlier. The Hong Kong-based jewelry manufacturer and retailer said revenue for the period rose 34 percent to $67.2 million, mainly due to the growth of the company's Enzo retail division, which currently has 93 retail stores in operation across Greater China.
Matria Healthcare (MATR-$23.12), a provider of wellness and disease management programs to employers, private and government sponsored health plans, and pharmaceutical companies, could make an attractive takeover target and has seen strategic interest, industry bankers recently told dealReporter. A fair price in the event of the sale would be about a 35 – 40% premium to its current trading price, as the stock has recently been depressed, according to a banker familiar with the company.
Mesa Air Group Inc. (MESA-$3.22) said Friday its fiscal fourth-quarter and full-year earnings statement have been delayed until Jan. 15, as proper reporting of a business sale is taking longer than expected. Mesa Air Group is seeking a buyer for its unprofitable Wichita-based Air Midwest operations or for the division's fleet of Wichita-built Beech 1900D aircraft.
According to a filing made with the Securities and Exchange Commission, the investment arm of the Dubai government raised its holding in the casino operator MGM Mirage (MGM-$84.25) to 6.5% after it bought a piece from controlling investor Kirk Kerkorian.
News Corp.'s (NWS.A-$20.60) strategic positioning is not reflected in its share price, according to Standard & Poor's Tuna Amobi. The analyst rates the parent company of social networking site, MySpace, and the owner of Fox News Corp. a buy and gives it a 12-month price target of $26 a share.
Standard & Poor's Ratings Services said Petrobras Energia SA's (PZE-$14.75) ratings will not be affected by the Brazilian integrated energy firm’s announcement of several deals to rebalance its asset portfolio.
Piedmont Natural Gas (PNY-$26.64) posted a net loss of $8.3 million or $0.11 per share, compared to a loss of $6.2 million or $0.08 per share in the prior year quarter. The gas utility said its fiscal fourth-quarter loss widened as warmer than normal weather lowered consumers' demand for gas. On average, four analysts polled by First Call/Thomson Financial expected a loss of $0.05 per share for the fourth quarter.
Goldman Sachs analysts led by Edlain Rodriguez in New York raised their 2008 earnings estimate for Potash Corp. (POT-$144.19) by 20 percent to $6.60 a share in a note to clients that cited the fertilizer manufacturer’s “unprecedented sustainable pricing power in potash,” due to strong demand and tight supply. The analysts also increased their 12-month share-price forecast to $180 a share.
Macroeconomic pressures will likely hinder near-term growth at Resources Connection Inc. (RECN-$18.13), said Morgan Stanley analyst Christina Woo as she downgraded her rating on the accounting and finance consultancy to "Equal weight" from "Overweight." Woo lowered her 2008 earnings forecast to $1.08 per share from $1.19 per share, and slashed her price target to $22 from $34.
Despite seeing interest from strategic buyers for parts of the company, A. Schulman (SHLM-$21.09) does not see any sense in a break-up, dealReporter has learnt. The listed Ohio-based plastic resins company, which recently hired a new CEO, has not been approached by any potential suitor interested or able to pay a strategic premium for the entire company. However, a source claiming knowledge of the situation said interest had materialized for some of Schulman’s assets, specifically its plastics compounding plants in Europe.
Morningstar remains bullish on the prospects for share price appreciation for Siemens AG (SI-$157.10) and ABB Ltd. (ABB-$29.13) in 2008. Despite stellar returns in 2007 (37% for Siemens and 43% for ABB), analysts think that strong earnings growth will lead to superior stock price gains in 2008 for both large-cap diversified companies in the global industrial space. Fair value estimates on Siemens and ABB is $190 and $36 per share, respectively.
Sandell Asset Management notified Sybase Inc. (SY-$26.11) on Friday it would name three independent nominees for director at the next annual meeting. The hedge fund, which owns about 6 percent of the outstanding stock of the database-software maker—and is its second-largest shareholder—said in a statement that Sybase has failed to take suggested actions, including a spin-off and a $500 million share buyback, to improve its value. Sandell said the stock could reach $39 if its proposals were adopted.
Zacks senior Latin American markets analyst Claudio Freitas, CFA, maintains a Sell rating to the ADRs of airline company TAM S.A. (TAM-$24.18). Growing competition in Brazil’s airline industry, energy costs, and the accident in July 2007, at the Congonhas airport in Sao Paulo will continue to undermine the company’s results for the next few quarters.
Theravance (THRX-$19.33) says the FDA’s Anti-Infective Drug Advisory Committee will review its Telavancin compound. While some investors equate an additional review with increased risk of regulatory delays, some analysts believe a likely outcome is approval of the once-daily injection intended to treat infections caused by gram-positive bacteria. Credit Suisse analyst Michael Aberman thinks the stock will see continued pressure as it faces financing overhang, but believes telavancin will ultimately get approved.The analyst has a $36 price target on the stock.
Thanks to growing sales overseas and cost-cutting efforts, prospects for 2008 look bright at 3M Co. (MMM-$85.09), the maker of Scotch tape, Post-it notes and a variety of products used by the electronics, telecommunications and security industries. Deutsche Bank Securities analyst David Begleiter rates the shares a BUY and has a 12-month price target of $105 a share.
Trump Entertainment Resorts (TRMP-$4.39) said it arranged a new line of credit to pay off its mortgage debts. The key part of the refinancing is that the new five-year deal eliminates certain requirements restricting the firm's ratio of debt-to-earnings. Brean Murray, Carret & Co. analyst Ryan Worst, who rates the stock "Buy," added that investors are missing the value of the casino operator and of the Taj Mahal resort in particular. He holds a price target of $13 per share.
The Street.com upgraded to BUY from HOLD the shares of organic food-distributor United Natural Foods Inc. (UNFI-$31.42), citing attractive valuation levels.
Standard & Poor’s Equity Research initiated coverage of semiconductor test company Verigy Ltd. (VRGY-$26.30), with a BUY recommendation. Analyst C. Montevirgen expects share gains in the testing market for the faster-growing semiconductor segments, and widening margins for Verigy as its outsourced manufacturing moves to China. Albeit concerned about capital expenditures among chipmakers, Montevirgen thinks that equipment spending will resume in certain segments, such as NAND flash, which, combined with market share gains, should aid Verigy's sales. The 12-month target price is set at $31 a share, based on a peer-average P/E of 15 times fiscal 2008 (Oct.) EPS estimate of $2.09.
Vonage Holdings Corp. (VG-$2.00) and Nortel Networks Corp. (NT-$15.24) are close to settling their patent dispute, and under terms more favorable to the Internet phone service provider than in other patent cases it settled this year, according to a source close to the negotiations.
Editor David J. Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.
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