24/7 Wall St. » ALJ

24/7 Wall St. Closing Bell (GRPN, BIG, DAL, RGLD, SD, SPWRA, TSL, SBUX, LNKD, ANLY, OXGN, RST, MTZ, ALJ, DRWI, LEDS, CHK, IPSU, SGEN)

Paul Ausick — Fri, 04 Nov 2011 20:09:35 +0000

Markets opened lower this morning, and a modest gain of 80,000 non-farm jobs and a slight improvement of the US unemployment rate to 9.0% didn’t lift investors’ spirits before the opening. Today’s confidence vote in Greece kept financial stocks down as investors try to figure out what it will mean if the Greek prime minister is booted out and the country doesn’t accept the latest batch of austerity tied to the country’s $180 billion bail-out package. The IPO of Groupon Inc. (NASDAQ: GRPN) went off at $20, with shares rising to $31.44 before pulling back to $26.11 in the last half hour of trading. Crude oil is basically flat and gold has pulled back less than -0.5%. The dollar is slightly stronger against both the euro and the yen, putting weight on commodities.

The unofficial closing bells put the DJIA down more than 61 points to 11,983.32 (-0.51%), the NASDAQ fell more than 11 points (-0.44%) to 2,686.15, and the S&P 500 fell -0.63% or more than 7 points to 1,253.23.

There were several analyst upgrades and downgrades today, including Big Lots, Inc. (NYSE: BIG) raised to ‘outperform’ at Wedbush. Delta Air Lines (NYSE: DAL) was raised to ‘outperform’ at Zack’s and was named the firm’s Bull of the Day; Royal Gold Inc. (NASDAQ: RGLD) was cut to ‘sector perform’ at National Bank; SandRidge Energy Inc. (NYSE: SD) was cut to ‘hold’ at Stifel Nicolaus; Sunpower Corp. (NASDAQ: SPWRA) was cut to ‘underperform’ at Macquarie; and Trina Solar Ltd. (NYSE: TSL) was cut to ‘neutral’ at Macquarie. We noted a change in the solar sector earlier today.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Starbucks Corp. (NASDAQ: SBUX) is up about 6.4%, at $44.04, after posting a new 52-week high earlier in the day; LinkedIn Corp. (NASDAQ: LNKD) is down more than -6%, at $82.09; Analysts International Corp. (NASDAQ: ANLY) is up nearly 28%, at $4.67; Oxigene, Inc. (NASDAQ: OXGN) is down -33%, at $1.22; Rosetta Stone, Inc. (NYSE: RST) is down more than -23%, at $7.77, after posting a new low earlier today; and MasTec, Inc. (NYSE: MTZ) is down -20%, at $17.52.

Several other standouts from today are as follows…

Alon USA Energy, Inc. (NYSE: ALJ) is up nearly 46%, at $11.40. The Israeli-based oil refiner has struck a deal to receive 25,000 barrels/day of WTI crude at its Louisiana refinery, which will give its margins a sharp boost.

DragonWave, Inc. (NASDAQ: DRWI) is up 36%, at $4.91. The company has agreed to buy the microwave business from the joint venture Nokia Siemens Networks.

SemiLEDS Corp. (NASDAQ: LEDS) is up nearly 37%, to $4.04. The company got a huge boost from the Chinese government’s announcement that it will ban incandescent light bulbs beginning next year.

Chesapeake Energy Corp. (NYSE: CHK) is down more than -6%, at $27.24. The company reported better-than-expected earnings this morning, but asset sales to generate cash are causing concerns among investors.

Imperial Sugar Co. (NASDAQ: IPSU) is down more than -12%, at $6.01, after posting a new 52-week low of $5.75 earlier today. The company is suspending its quarterly dividend.

Seattle Genetics Inc. (NASDAQ: SGEN) is down about -18%, at $18.02. The shares posted an all-time high earlier this week, but the stock price run-up may have exaggerated the company’s growth prospects.

Stay tuned for Monday. Boston Federal Reserve president Eric Rosengren is giving a speech in the morning. We have noted the following events (all times Eastern):

11:00 a.m. – Four-week Treasury bill announcement
11:30 a.m. – Three- and six-month Treasury bill auction
3:00 p.m. – Federal Reserve consumer credit report

Paul Ausick

Filed under: Analyst Calls, HI/LOW, Market Close Tagged: ALJ, ANLY, BIG, CHK, DAL, DRWI, GRPN, IPSU, LEDS, LNKD, MTZ, OXGN, RGLD, RST, SBUX, SD, SGEN, SPWRA, TSL

Top Analyst Upgrades & Downgrades (ALJ, APA, CARB, CHK, DVN, JKS, LOGI, MRVL, MGM, MCP, MOS, PHM, PER, SAP, SM, TRV, VMW)

Administrator — Tue, 20 Sep 2011 12:20:26 +0000

These are some of this Tuesday’s top analyst upgrades, downgrades, and initiations seen having an impact from Wall Street research calls.

Alon USA Energy, Inc. (NYSE: ALJ) is the value stock of the day at Zacks.
Apache Corp. (NYSE: APA) Started as Buy at Deutsche Bank.
Carbonite, Inc. (NASDAQ: CARB) Started as Buy at Canaccord Genuity; Started as Outperform at Oppenheimer; Started as Outperform at William Blair; Started as Buy at BofA/ML.
Chesapeake Energy Corporation (NYSE: CHK) Started as Hold at Deutsche Bank.
Devon Energy Corporation (NYSE: DVN) Started as Hold at Deutsche Bank.
JinkoSolar Holding Co., Ltd. (NYSE: JKS) Cut to Neutral at Credit Suisse.
Logitech International SA (NASDAQ: LOGI) Cut to Sell at Goldman Sachs.
Marvell Technology Group Ltd. (NASDAQ: MRVL) Cut to Market Perform at JMP Securities.
MGM Resorts International (NYSE: MGM) Raised to Overweight at Morgan Stanley.
Molycorp, Inc. (NYSE: MCP) Cut to Neutral at JPMorgan.
Mosaic Co. (NYSE: MOS) Raised to Sector Outperform at CIBC.
PulteGroup, Inc. (NYSE: PHM) Raised to Buy at UBS.
SandRidge Permian Trust (NYSE: PER) Started as Outperform at Oppenheimer; Started as Market Weight at Wells Fargo; Started as Outperform at Baird.
SAP AG (NYSE: SAP) Raised to Outperform at Wells Fargo.
SM Energy Co. (NYSE: SM) named Bull of the Day at Zacks.
The Travelers Companies, Inc. (NYSE: TRV) Raised to Buy at Goldman Sachs.
VMware, Inc. (NYSE: VMW) Started as Buy at Merriman (Monday night).

JON C. OGG

Filed under: Analyst Calls Tagged: ALJ, APA, CARB, CHK, DVN, JKS, LOGI, MCP, MGM, MOS, MRVL, PER, PHM, SAP, SM, TRV, VMW

Energy Watch Part II: Refining Woes Remain (WNR, ALJ, DK, TSO, VLO, XOM, CVX, COP)

247wallst — Thu, 14 Aug 2008 08:29:21 +0000

It’s no secret the oil refining margins have been dropping like a rock for the past few quarters. When pump prices began to approach a US-wide average of about $4/gallon, US drivers started changing their habits.The latest numbers indicate miles driven dropped by 12.2 billion miles, almost 5%, in June. That translates into millions of gallons of gasoline that were either not refined or were not sold. This decrease has hit refiners hard.

The award for largest drop in value goes to Western Refining (NYSE:WNR), down nearly 84% from a 52-week high of $55.72 to close yesterday at $9.23. Next on the list are two refiners that are majority-owned by Isreali parents: Alon USA Energy Inc (NYSE:ALJ) fell by almost 72%, from a high of $41.25 to $10.49; and Delek US Holdings (NYSE:DK) dropped by 69%, from $28.34 to $8.64. Tesoro (NYSE:TSO) fell by 64%, from $65.98 to $18.43, and Valero (NYSE:VLO) fell by nearly 50%, from $75.75 to $34.79.

We could include the refining and marketing operations of majorintegrated companies like Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX),and ConocoPhillips (NYSE:COP), which have also lost a ton of money inthe past year, but we’re saving integrated oil companies untiltomorrow’s installment.

Every one of these independent refiners faces the same problem: highcrude oil prices are compressing profit margins because the full costof the crude can’t be passed on at the pump. Consumers have been votingwith their feet. US gasoline consumption has dropped in every one ofthe last 12 months, and the year-over-year drop in consumption amountsto 2.5%. The US Energy Information Administration (EIA) attributes"almost all" of the drop in consumption to higher prices for crude.

And the situation won’t improve. The EIA projects declines in USpetroleum consumption through the end of 2009. So, what are therefiners doing to deal with this situation? They’re either trying tosell some of their refineries or they’re trying to figure out a way toride out the tide of high crude prices. As the price of crude hasfallen over the past few weeks, refining stocks have recovered a bitbut all are still quite near 52-week lows.

Selling refineries seems like a non-starter. Who’s gonna buy? Anotherrefiner? Private equity? A possibility is a national oil company likeSaudi Aramco, which has plenty of capital and is currently building amassive refinery in Saudi Arabia to export refined products. When theseexports begin to hit the spot markets, gasoline prices will rise againand local refineries will benefit because they’ll be able to sellrefined products at the higher spot price.

But there is no evidence for that scenario. What’s real is thatrefiners are in for several more tough quarters. And if US driverscontinue the trend of driving less, we could actually be witnessingtrue demand destruction, not just demand erosion.

Paul Ausick
August 14, 2008

Oil Gushing Again (XOM, COP, RIG, APA, OMNI, NR, WNR, ALJ)

247wallst — Tue, 10 Jun 2008 08:19:05 +0000

Yesterday, the energy sector gained 1.69%, as money flowed into ExxonMobil (NYSE:XOM), up 2.63%; ConocoPhillips (NYSE:COP), up 3.07%, Transocean (NYSE:RIG), up 3.21%; and Apache (NYSE:APA), up 6.04%. Other big gainers were oilfield services companies, with OMNI (NASDAQ:OMNI) up 11.52% and Newpark (NYSE:NR) setting a new 52-week high.

Refiners fared worse, with Western Refining (NYSE:WNR) off 11.22% for the day and Alon (NYSE:ALJ) off 6.53%. In light of last Friday’s huge jump in crude oil, this all makes some sense. The oil majors and the E&P companies are getting their reserves factored in at the new prices. New exploration and drilling is bumping up the services companies. Refiners, who can’t raise prices fast enough to offset the costs of crude, are falling.

Many analysts think last week’s spike in crude prices was the result ofshort covering, abetted by the strengthening dollar. That may accountfor the uptick in companies with E&P plays, but what about servicescompanies? Yesterday’s surge indicates that traders are pricing newoperations into the companies’ stocks. But, if demand for crude isdropping, and according to the IEA, the latest projections for the restof 2008 indicate a global drop of 70,000 b/d, then it iscounter-intuitive that drilling will increase.

The oil majors and the E&P companies do not have to pump the oil.In fact, the longer it stays in the ground, the more valuable itbecomes. That is not good for the services companies. As for therefiners, as demand for gasoline drops, they manage their crudeinventory more carefully. That’s why the EIA reported lower demand forgasoline last week, even as crude inventories declined. Refiners aren’tbuying as much as prices stay above about $120 because they can’tcharge enough for the finished product to make a profit. They will onlyreplenish inventory when absolutely necessary.

The current calls for opening up the US outer continental shelf andother protected areas for exploration are just noise. There is nothingin any of those proposals that will have any short-term impact on crudeprices. The long-term impact won’t accomplish anything more than toreplace old supply with new–a costly zero-sum game.

Lower consumption, brought on by higher prices, will reduce (or evendestroy) demand. One way to hurry this along is through seriousconservation. For some reason, no politician appears interested inreducing highway speed limits, which could save as much as 10%-20% ofUS gasoline consumption. Sooner or later conservation will enter thediscussion because nothing else has any significant short-term impact.Sooner would be better.

Paul Ausick
June 10, 2008