Earnings season has mostly wound down. We have many key business events and key economic events scheduled for next week. In asset sales and merger land, we will be paying close attention to American International Group Inc. (NYSE: AIG) and Millipore Inc. (NYSE: MIL). For earnings we have Costco Wholesale Corporation (NASDAQ: COST) and VeriFone Holdings, Inc. (NYSE: PAY); while Verifone also joins SIRIUS XM Radio Inc. (NASDAQ: SIRI) on mere price-watch or chart-watch alerts, but both are at critical junctions. CombinatoRx, Incorporated (NASDAQ: CRXX) is up for an FDA event and Berkshire Hathaway Inc. (NYSE: BRK-B) has its annual letter being sent out. We’ll also be watching sales data from both Ford Motor Co. (NYSE: F) and Toyota Motor Corp. (NYSE: TM).
On the macro-economic front, watch for the Beige Book and then unemployment data. We have given preliminary previews for each along with relevant comparable data.
American International Group (NYSE: AIG) is still said to be close to more asset sales. Based upon the earnings and based upon the company saying it may require more assistance, we’ll see if any key asset sales come next week as we read about earlier this week. AIG is voted as the most-hated company, so any raises need to come from internal sources rather than from Uncle Sam and from you and me. Shares were down almost 10% late on Friday after earnings, so it would seem expectations have headed even further south than what we expected earlier in the week.
Berkshire Hathaway Inc. (NYSE: BRK-B, BRK-B) is releasing the Annual Letter from Warren Buffett this weekend. We have already offered a preview of what we expect to hear and compared it to lat year’s just awful letter. We also showed how short sellers have really attacked Berkshire Hathaway stock and its largest holdings.
CombinatoRx, Incorporated (NASDAQ: CRXX) has an FDA PDUFA goal date for the review of its Exalgo™ extended-release tablets new drug application on deck. This NDA application date was moved from Monday, February 22, 2010 to Monday, March 1, 2010 due to federal government closings. This may be a make or break event for CombinatoRx due to its micro-cap status. This fell from $1.34 to $1.26 when the delay was announced two weeks ago and this is at $1.20 ahead of the event and this is the lowest the stock has been since the delay.
Costco Wholesale Corporation (NASDAQ: COST) is out with earnings next Wednesday. BJ’s is also on deck, but we are looking to see if Costco is winning in the trade-up as Wal-Mart gave disappointing earnings a week ago. Thomson Reuters has estimates of $0.71 EPS on approximately $18.5 billion. The big question here remains on valuation as it trades at more than 20-times 2010 earnings estimates despite the notion that Costco stock came within 0.1% of reaching its 52-week highs on Friday. Many traders say that stocks hitting new highs usually continue hitting new highs, but many are probably also expecting profit taking here.
Millipore Inc. (NYSE: MIL) is one we are likely to find out just how real the bidding is by Monday or Tuesday. The stock has risen sharply, about $20 per share, on reports that Thermo Fisher (NYSE: TMO) is going to bid $6 billion or so for the company. Millipore has confirmed that it is reviewing strategic alternatives, and there are now rumors that 3M Co. (MMM) is potentially interested in a bid. If GE (GE) were not still recovering from 2009 woes, they would be interested too… 3M bought Cuno and GE bought Ionics for water and filtration plays in the last five years or so.
SIRIUS XM Radio Inc. (NASDAQ: SIRI) broke under $1.00 this morning, but shares have recovered. Where the stock closes is anyone’s guess but the stock briefly hit as high as $1.18 this week. Its earnings were positive for Q4 but the stock is down on major profit taking and based upon stretched dilution values when you include the Liberty conversion shares. We will be giving the full expectations this weekend for what to expect in our “Unusual Suspects” due tomorrow.
VeriFone Holdings, Inc. (NYSE: PAY) has a potential make or break earnings event next week even if this is no longer as actively traded as it used to be. VeriFone is the company you see at checkout counters all across the country. The stock is also all the way back up to within striking distance of that $20.00 handle that was the gap-down level from when its shares imploded on accounting issues in late 2007 from $40+ down to $20… then before the second wave down in late 2008. This will mean that almost every single holder who bought in the last two years will be profitable and this will mark what could be a triple-top if it gets just above $20… The short sellers recently lightened up their short interest by 12% down to 2,483,166 shares. Thomson Reuters has estimates of $0.23 EPS and $217.75 million in revenues. Our main concern is fiscal 2010 guidance and whether the company is confident enough to offer targets, and Thomson Reuters $1.04 and 909.06 million in revenues for fiscal Oct-2010. For whatever it is worth, VeriFone shares are now above the average analyst price targets.
On a more macro-event, we have major February auto sales on deck for Tuesday. The biggest take away is on Ford Motor Co. (NYSE: F) and Toyota Motor Corp. (NYSE: TM). Weather will definitely have interfered in car shopping. But what is most important is that we are likely to see the full brunt of how this major wave of recalls is impacting Toyota sales of new cars. What is interesting is that shares bottomed out earlier this month at $71 to $72 and the stock has been holding steady even as the headlines got worse and as Akio Toyoda testified. Ford is likely to have the most to gain as the American public has shown it the most favorable brand of choice as it did not take extraordinary government bailout money as Chrysler and GM did.
On Wednesday we have the Fed’s Beige Book. It will be interesting to see if there are any new tidbits available considering that we had Bernanke testimony this week and considering we already got the logic behind the recent hike to the discount rate. We will be handicapping this one ahead of time as a ‘less-impact than normal’ as far as what to expect from a trader reaction.
Unemployment and the change in non-Farm payrolls for February on deck next Friday. Hands down and absolutely this is the most important known economic event of the week. The recent drop in confidence and the re-rise of the weekly jobless claims is putting added pressure on this figure. We so far have estimates of 9.7% to 9.8% on unemployment and roughly -20K on jobs… stay tuned as these figures are a blend of consensus data from Reuters, Bloomberg, Dow Jones and others. This will be previewed at least once next week as the economist estimates get firmed up into a real consensus.
Have a great weekend.
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Jon C. Ogg