We always have a focus on dividends and the ability to grow payouts.  In each of these we have given forward implied P/E ratios, and given more financial data and additional color where applicable.  The one issue we always have to throw out in value stocks is that value stocks often lack momentum or catalysts to drive higher share prices.  These generally require time and patience to pan out.

Dell Inc. (NASDAQ: DELL) is managing to turn itself from a former growth PC player into a value stock, and its shares are holding up better than rival Hewlett-Packard Co. (NYSE: HPQ).  Being in the PC business now almost seems so 1990s and that is why both Dell and H-P have been trying to migrate into new IT/services and other data center and enterprise efforts. There was a time Michael Dell was considering trying to take the company private.

You already know that the excitement in the PC and consumer electronics segment remains Apple Inc. (NASDAQ: AAPL).  Dell has still been managing to beat its earnings expectations in each of the last four quarters and Thomson Reuters has earnings estimates of $1.70 EPS for its fiscal year January-2012 and $1.76 EPS for January-2013.

Unlike H-P, Dell is actually close to 52-week highs.  At $16.37, its 52-week range is $11.34 to $16.80 and shares are up close to 10% in the last two months.  The company has some distractions in its smartphones and it is not considered a huge tablet-PC winner yet.  On a forward earnings blend, Dell trades at only 9.5-times forward earnings.  Its market cap is $31 billion and the company has nearly $15 billion in cash and investments with which it can make acquisitions, buy back stock, or decide to finally start paying a dividend.  If Cisco is a dead stock and can finally start paying a dividend, Dell can as well.

Thomson Reuters has a consensus value of $16.67 for the stock, but this could go back up to $20.00 if Dell wants to be more shareholder friendly (i.e. dividends and buybacks). The biggest concern about both Dell and H-P here is that earnings are coming this week.  H-P remains cheaper on forward earnings but the company is considered to be in more disarray with management changes.

As with most value stocks, there is rarely a hurry and being a patient investor can always be more prudent than piling into shares pre-news just because someone says “there is value in the shares.”

Teva’s $81.50 offer per share in cash may seem like a low premium of only about 6% to the closing price on Friday, but this is about 12% higher than Cephalon’s earlier $73 per share offer.   More importantly, this is nearly a 40% premium to Cephalon’s pre-merger offers.  The boards of directors of Teva and Cephalon have each voted in favor of this merger.  What we are most curious about is simple… Which biotech and small pharmaceutical companies will be next to be acquired?

Celera Corporation (NASDAQ: CRA) is one we felt made sense for genomics, particularly when you consider that so much of Celera was raw cash.  At that time of the deal, we also updated several other genomic possible targets.

Cephalon was noted as a possible buyout target even back at the end of January, and we gave a list with explanations on each of the following and more:  Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN); Dendreon Corporation (NASDAQ: DNDN); Human Genome Sciences, Inc. (NASDAQ: HGSI); Cubist Pharmaceuticals Inc. (NASDAQ: CBST); United Therapeutics Corporation (NASDAQ: UTHR); Cadence Pharmaceuticals Inc. (NASDAQ: CADX); AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG); and Sangamo Biosciences Inc. (NASDAQ: SGMO).  Details with explanations on that full list here.

Foreign buyers have an advantage of preying on US companies due to the incredibly weak U.S. Dollar and drug companies are looking to bolster sagging drug pipelines.  The deals will continue, but the real risk for biotech investors is that there will be very few quality companies with real earnings left to invest in.

Not all of these other companies will be acquired.  Some are too expensive though others offer a buyer a significant pipeline and emerging drug boost… for those willing to pay up.

JON C. OGG

Biotech HOLDRs (NYSE: BBH) is the oldest biotech ETF and its shares hit a multi-year high of $107.75 today.  That is up more than 25% from the lows of last summer.  Amgen Inc. (NASDAQ: AMGN), Gilead Sciences, Inc. (NASDAQ: GILD), and Biogen Idec Inc. (NASDAQ: BIIB) now equate to right at 85% of the entire Biotech HOLDRs.  Genentech and Genzyme are now not there to counterbalance the ETF with large weightings.

SPDR S&P Biotech ETF (NYSE: XBI) avoids this as it has more companies in the underlying ETF but it too runs the risk that many of the mid-cap constituents are being acquired.  This one has not hit a year-high today, but its shares are up more than 35% from the lows of last summer.

First Trust NYSE Arca Biotechnology Index Fund (NYSE: FBT) has a more diversified holdings base as well, but its weighting is over 6% in Celera Corporation (NYSE: CRA) (already in a deal) and just under 6% in Cephalon Inc. (NASDAQ: CEPH) with a status pending on whether or it stays independent or merges.  Soo far it has yet to take out a 52-week high but even by a closer margin than the “XBI” above.  This one is up nearly 40% from the lows of last summer.

iShares NASDAQ Biotechnology (NASDAQ: IBB) also came well within 1% of a 52-week high yet again today, with its shares up about 35% of last summer’s lows.  If you are looking for a biotech ETF with the least disruptive impact by the M&A waves in the sector this one (at least currently) appears to be the least dented by M&A.  That may change but that is noted solely ‘just in case.’

Obviously not every single biotech will be acquired.  That is not the point.  What is important to watch is how the continued trend of mergers is changing the weighting of each of these ETFs.  If these weightings change too much it can impact how each of these trade.

JON C. OGG

Star Scientific, Inc. (NASDAQ: CIGX) is 4.6% before market open to $3.40, within a 52-week range of $1.07-$3.84. The company just added a member to the board of directors.

Celera Corporation (NASDAQ: CRA) is up nearly 30% premarket on heavy volume to $8.12, relative to a 52-week range of $5.35-$7.72. Quest Diagnostics has agreed to acquire the pharmaceutical company for $344 million

Cisco Systems, Inc. (NASDAQ: CSCO) is up 2.6% to $7.42, relative to a 52-week range of $16.97-$27.74. The company announced it will pay its first ever dividend.

Agilent (A) Raised to Outperform at Credit Suisse.
Celera (CRA) Raised to Overweight at Thomas Weisel.
Concur Tech (CNQR) Raised to Buy at Piper Jaffray.
Corning (GLW) Raised to Buy at Citigroup.
AutoZone (AZO) Cut to Neutral at UBS.
BHP Billiton (BHP) Cut to Underperform at Credit Suisse.
Cerner (CERN) Cut to Hold at Deutsche Bank.
GOL Linhas Areas Inteligentes (GOL) Cut to Neutral at UBS.
O’Reilly Auto (ORLY) Cut to Neutral at UBS.

JON C. OGG
March 23, 2009

Stone Energy (SGY) Posts a loss for the last quarter. Sells down to $5.30 from 52-week high of $73.96.

Celera Corp (CRA) Outlook is below estimates. Plunges to $6.76 from 52-week high of $17.56.

Hercules Offshore (HERO) Still dropping after booking large impairment. Down to $1.95 from 52-week high of $39.47.

Douglas A. McIntyre

• STOCK TICKERS: ABT, BSX, MDT, JNJ, SRDX, ANPI, BAYRY, MAXY, AMGN, CRA, INGN, CELG, MRK, SNY, GSK, AKRX, ARYX

This week we saw another FDA Approval in stents as Abbott’s (NYSE: ABT) XIENCE drug-eluting coronary stent was approved for marketing.  While this is causing a resurgence in stents, this space is about to become highly competitive (stocks covered: ABT, BSX, MDT, JNJ, SRDX, ANPI).  Introgen (NASDAQ: INGN) has a new twist for head and neck cancer… give it a cold, literally.  Celgene Corp. (NASDAQ: CELG) actually won out as a competitor’s bone marrow disease trials failed to meet expectations.  Merck (NYSE: MRK) was an FDA decision winner as it gets to keep its lead on the cervical cancer vaccine market in the U.S. tied up for at least 6-months longer than it was anticipated (stocks covered: MRK, SNY, GSK).

This may be a tiny company, but a patent was awarded in bone marrow and stem cell transplants.  While a biotech turned over its hemophelia treatments to a larger company, hemophelia treatments may be better off now (stocks covered: BAYRY, MAXY, AMGN).  Vaccine awards are going to keep sales up at one small vaccine maker.  One Alzheimer’s Disease treatment that originally had high hopes has bitten the dust.  P&G walked away from a partner this week, killing a tiny biotech (stocks covered: PG, ARYX).

And on the front for reviews:

• Do you remember all the hype and hopes for synthetic blood?  This looks like the last player has gone on to greener pastures.
• What is a good investment that has backed way off from highs that should show steady growth in the China health care sector?  We evaluated one potential company for this.

These issues are more stock issues than anything else:

• Celera Corporation (NASDAQ: CRA) completed its journey to independence and took its 3-letter ticker over to NASDAQ.
• Bayhill Therapeutics withdrew its plans for an IPO.  MS and diabetes patients will have to look elsewhere, for now.

Have a happy and safe LONG Fourth of July weekend.  I think there is a new treatment on the market for burnt hand trauma from fireworks, but the FDA has it on hold until next February.

Jon C. Ogg
July 4, 2008

Speaking of Generics, Teva Pharmaceutical Industries (NASDAQ: TEVA) was weak all week after Mylan Inc. (NYSE: MYL) has signed a pact with India’s NATCO Pharma Ltd. to produce a generic version of Teva’s multiple sclerosis treatment called Copaxone.  As this  was an old favorite buy in generic investor hearts you can imagine this will be covered frequently this next week since the stock is now 15% off of its highs and closer to a 52-week low.

We know that Invitrogen (NASDAQ: IVGN) is buying Applera’s Applied Biosystems (NYSE: ABI) unit.  But what about Celera Group (NYSE: CRA)?  Traders may be looking for the "next merger candidate"and that might fit logically.

China Medical Technologies Inc. (NASDAQ: CMED) went up big on earnings news this last week and continued to rise even by the end of the week further than the initial reaction.  Technicians may have this one on a momentum screen now.

Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI) may be of interest after it showed some positive stent data, and its launch of QUILL may all help the perceptions next week on this small molecule company.

It’s always good to know what short sellers are targeting.  The last short selling report showed a huge drop off in the short interest compared to prior reports in large cap biotech stocks like Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corporation (NASDAQ: CELG), and others.  FULL SHORT INTEREST DETAILS HERE.

Intuitive Surgical Inc. (NASDAQ: ISRG) was defended by William Blair this last week and shares managed to rally during the week after that news was out.  After seeing a 3-month low traders may focus here next week as a short bottom fishing attempt.

Vivus Inc. (NASDAQ: VVUS) is hanging tough after a huge gap up in its QNEXA treatment for obesity and for diabetics.  Shares barely closed down on the week, rather impressive for a small cap with a history of not holding gains.  Traders will definitely be keeping their radar eyes on this one for opportunities to buy it up or short it.

Lastly, there was a lot of news on the rheumatoid arthritis front with many companies delivering solid data for drug studies in the debilitating area from companies such as Abbott Laboratories, Array, Eli Lilly, Incyte, J&J, Schering-Plough, and Roche.  Much of the news seems overlooked by the end of a summer week, so watch these for next week.  Solid Developments for Rheumatoid Arthritis (ABT, ARRY, LLY, INCY, JNJ, SGP, RHHBY)

Jon C. Ogg
June 14, 2008

This separation would be via a one-for-one redemption of the Applera Corporation-Celera Group tracking stock for new Celera Corporation shares.  These will still keep the "CRA" ticker, but it would be a NASDAQ-listed stock.  At Celera’s request, Applera Corporation-Celera Group tracking stock would be de-listed from The New York Stock Exchange.   So it appears that Celera Corporation would become a separate, publicly-traded company, rather than a subsidiary or tracking stock as it is currently.

Kathy Ordonez, currently President of Applera Corporation-Celera Group, is expected to serve as the CEO of Celera, and the company headquarters will be located in Alameda, California.

Applera Corporation-Applied Biosystems Group (NYSE:ABI) common stock would continue to be traded on the New York Stock Exchange.

There is one potential warning flag that investors should look at closdely here.  On "OUR HISTORY" on the website, the company pans part of the business:

• While the Celera database business ultimately became profitable, it was clear by 2000 that this was not a sustaining business model, as the public effort caught up and provided free access to genome sequences.

Celera Genomics was formed in 1998 and in 1999 there was arecapitalization in a two-class stock issuance.  In early 2000, afollow-on offering of Applera Corporation-Celera Genomics stock raises$944 million.  Celera acquired Axys Pharmaceuticals in 2001 for itssmall molecule drug discovery.

These complex structures do not do any justice for shareholders.Companies either need to act like conglomerates or they need to befocused on core operations.  These tracking stocks ultimately don’twork.  The intent of tracking stocks is good for "unlocking shareholdervalue" while allowing the parent company to maintain control.Unfortunately, the road to hell is paved with good intentions.

For better or worse, this separation looks like it will make it more easy to understand what each company actually does.  We’ll be looking into this further for our Special Situation Newsletter, but we’ll hold off on making a decision on this one until we see the formal plans.

Jon C. Ogg
February 29, 2008

• Arcelor Mittal (NYSE: MT) raised to Buy from Hold at Deutsche Bank; also raised to Buy from Hold at Citigroup.
• AT&T (NYSE: T) downgraded to Buy from Hold at Citigroup.
• Celera (NYSE: CRA) downgraded to Neutral at Piper Jaffray.
• Emulex (NYSE: ELX) raised to Outperform at FBR.
• MEMC (NYSE: WFR) raised to Buy from Neutral at Piper Jaffray.
• Microsoft (NASDAQ: MSFT) estimates raised and target raised to $42 at Goldman Sachs.
• OmniVision Tech (NASDAQ: OVTI) raised to Outperform from Neutral at Baird.
• Royal Dutch Shell (NYSE: RDS-A) downgraded to Underweight from Neutral at JPMorgan.
• Tenneco Inc. (NYSE: TEN) raised to Outperform at Bear Stearns.
• Textron (NYSE: TXT) raised to Buy from Hold at Citigroup.

Jon C. Ogg
January 25, 2008