Friday, January 25, 2008

Trading Alerts: Monday, January 27, 2007


Alberto-Culver (ACV-$23.52) reports earnings on Monday before the market opens. Analysts, on average, are expecting a share-net of $0.26 on revenue of $376.9 million, according to a poll by Thomson Financial. Citigroup analyst, Wendy Nicholson, recently upgraded her rating on the household and personal products company shares to "buy" from "hold" and raised the target price to $28 a share from $25 a share.

Is billionaire Wilbur L. Ross Jr. considering a bid for bond insurer Ambac Financial Group (ABK-$11.54)?

San Diego-based Amylin Pharmaceuticals Inc. (AMLN-$32.46) is projected to post a loss of 44 cents a share in the fourth quarter on revenue of $202.58 million. The catalyst for any sustainable upswing in the drugmaker’s stock price will be FDA marketing approval for its investigational diabetes drug exenatide LAR (once-weekly injection), the likely successor to Amylin's current diabetes drug, twice-daily Byetta.

Shares of Elizabeth Arden Inc. (RDEN-$18.28) climbed higher in after-market trading, after an analyst upgraded the company on Friday, saying the cosmetics maker's positioning and global nature could shield it from an economic downturn.

Phenix-based electronic components distributor Avnet (AVT-$33.55) recently reported healthy earnings and management said neither of its two major businesses show signs of slowing from a weakening economy. "Avnet seems to be an underappreciated growth machine"and "the stock seems to discount any coming weakness," Barron's reported on Sunday.

Baxter International (BAX-$61.00) issued an “urgent” recall of batches of its blood-thinner heparin due to reports they have caused severe allergic reactions—including diarrhea, chest pain and fainting—in some recipients.

Black & Decker (BDK-$69.98) announces fourth-quarter results on Monday morning before the market opens. In December, the power tool and home-improvement product manufacturer
lowered its sales growth outlook, citing the slumping housing market. Analysts, on average, are expecting a profit of 1.03 cents per share on sales of $1.61 billion, according to a poll by Thomson Financial.

Corning Inc. (GLW-$22.37) is forecast to post fourth-quarter earnings of 39 cents a share on sales of $1.55 billion. The flat-panel liquid crystal display glass supplier is expected to deliver solid results thanks to continued worldwide growth in the TV and computer monitor market as well as demand for fiber optic cable.

Shares of Cubist Pharmaceuticals Inc. (CBST-$18.51) continued to sink an additional 3 percent in after-market trading on Friday as concerns lingered about the possibility of a patent challenge to its only marketed drug, the antibiotic Cubicin.

Investors bought up E-Trade Financial Corp. (ETFC-$3.76) shares, overlooking a massive quarterly loss
on expectations the discount brokerage can revitalize its flagging business. But analysts warned exposure to potentially toxic mortgage debt could hamper the financial services company's growth.

Halliburton (HAL-$33.09) reports its fourth-quarter earnings on Monday. Citing growth in
the Eastern Hemisphere (Africa, East Asia, and the Middle East), analysts, on average, are expecting the oilfield service provider to earn a profit of 69 cents per share on sales of $4.06 billion, according to a poll by Thomson Financial.

Shares of contract driller Helmerich & Payne Inc (HP-$35.77) are poised to climb at least 40 percent, helped by its standard-setting equipment and solid management, Barron's said on Sunday.

When McDonald's (MCD-$54.10) announces its
fourth-quarter numbers before the start of trading Monday, investors will be listening to management numbers for new-store (worldwide) openings in the coming year and an explanation of how a U.S. economic slowdown might affect McDonald's same-store sales growth in coming quarters (considered a key measurement of retailer health because it evaluates growth at older locations rather than newly opened ones). Analysts polled by Thomson Financial expect the restaurant chain to report a profit of 71 cents per share on $5.61 billion in revenue.

For the first time, Merck (MRK-$47.79) and Schering-Plough (SGP-$19.02) have released details of how a key study of their cholesterol drug Zetia, also used in the combo pill Vytorin, wound up being delayed for more than a year after its findings were originally expected.

Harbinger Capital Partners Master Fund, a Cayman Islands-based hedge fund, is aiming to do proxy battle with The New York Times Co. (NYT-$14.66), as it seeks to get its own nominees elected to the board of the publisher.

Memory chip-maker SanDisk Corp. (SNDK-$25.62) reports
fourth-quarter earnings on Monday afternoon. Analysts, on average, are expecting a profit of 64 cents per share on sales of $1.27 billion, according to a poll by Thomson Financial.

Southern Copper Corp. (PCU-$82.78), a leading global metals producer, reported profits fell 53 percent in the fourth quarter to $311 million (from $655 million in the same quarter a year earlier) as a labor strike stalled production at Mexico's biggest mine, diluting the year's record sales.

Shares of Systemax Inc. (SYX-$15.59), a seller of computer hardware, electronic and industrial products, may dip in response to inquiries into the rebate-accounting practices of its TigerDirect retailer, according to Barron's.

Potential rewards outweigh the risks of holding shares of athletic apparel maker Under Armour Inc. (UA-$34.87), according to Barron's. However, analysts believe results hinge on consumer reaction to its new cross-training footwear.

Analysts, on average, expect VMware Inc. (VMW-$80.55) to post solid
fourth-quarter results on Monday morning of 24 cents a share on revenue of $417.4 million, though competition is looming for the virtualization software maker from Microsoft Corp., which is expanding its presence in the market.

Wireless and broadband growth should drive Verizon (VZ-$37.76) to post a profit of $0.62 a share on revenue of $23.96 billion. Earlier this month, Verizon's President and Chief Operating Officer Dennis Strigl said the company
has not seen any effects of the weakening economy hurting its business.

WellCare Health Plans Inc. (WCG-$43.12), a managed care provider undergoing a federal probe, announced the resignations of top executives and said its latest annual report and other filings will likely be late.

Wet Seal Inc. (WTSLA-$2.54) said that it laid off 41 employees as part of its planned cost-cutting initiatives to increase profitability. The teen apparel retailer expects the workforce reduction to result in pre-tax savings of about $4.3 million annually, beginning in fiscal 2008.

YRC Worldwide Inc. (YRCW-$18.86) is estimated to post fourth-quarter earnings of 54 cents a share on sales of $2.29 billion. The biggest U.S. trucking company (by sales) will probably dim 1Q:08 prospects when it meets with analysts in New York on January 28, Bear Stearns’ analyst, Edward Wolfe, said today in a report.

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.

3 comments:

Steve said...

Interesting stuff, but I am a little confused by the dates on this post. It can't be from 2007 because of the prices mentioned, but January 24 was a Thursday in 2008. Hopefully you are writing in 2009, that would make me a really avid reader and presumably a much more satisfied investor with 20 20 foresight.

David J. Phillips said...

Steve:

Thank you for the heads-up! Obviously, I typed in the wrong date for Monday :)

Mark Conner said...

Davis:

Kudos for upbraiding BM for failing to fire the right guy. As you know, Sarbanes-Oxley requires that the CFO sign off on every 10Q and 10K filing. Does not that alone require he suffer some consequences? There is one scenario though under which firing the treasurer might have been appropriate.

The earliest instances of failed auctions were all related to a toxic, one-off variety of Auction rate Securities (ARS) that were tied to sub-prime borrowers, shaky CDO's, and other labyrinthine arrangements with lenders to weak borrowers. Most, if not all, of this form of ARS were privately placed, which in BM's case would have required that they file a Qualified Institutional Buyer letter with their broker. There have been cases where these investments were made without such a letter, owing to the sloppiness of the brokers and of someone handling a company's cash day to day, i.e., a treasurer or controller. Now, it's unlikely that BM owned nothing but the toxic form of ARS (they make up only about 6% of the total ARS market) but it is this variety that touched off the whole trend of failed auctions.

Of course, this does not absolve the CFO of accountability, but it does shift the blame for the actual misstep to that underling.

Mark Conner
Principal
Corporate Treasury Investment Consulting LLC