24/7 Wall St. » DFS

24/7 Wall St. Closing Bell (ZNGA, AAPL, SCCO, AMGN, DFS, RIMM, DRI, STEI, HOV, ZQK, ISTA, RRR, MRT, INHX, CRYP, CIE)

Paul Ausick — Fri, 16 Dec 2011 21:08:47 +0000

US equity markets opened solidly higher this morning, but began to lose momentum by mid-morning. From there it’s been a mostly downhill day with the DJIA creeping back to nearly flat with about an hour of trading left this week. The release of November’s CPI — flat and up just 0.1% excluding food and energy — made no impact on trading. The IPO of social game maker Zynga Inc. (NASDAQ: ZNGA) went out at $10/share, but appears to be headed for a lower finish by about -5%. The US dollar showed some muscle today, and Treasury yields were lower, keeping the appetite for risk under wraps. WTI crude rose about 0.3% to $94.16/barrel and Brent crude was up by the same percentage at $103.91. Gold closed at $1,598.60, up about 1.4%.

The unofficial closing bells put the DJIA down about 6 points to 11,862.68 (-0.05%), the NASDAQ rose more than 14 points (0.56%) to 2,555.33, and the S&P 500 rose 0.3% or more than 3.5 points to 1,219.40.

There were several analyst upgrades and downgrades today, including an “outrageous” prediction from the UK’s Saxo Bank that Apple Inc. (NASDAQ: AAPL) would lose half its value in 2012. Other ratings actions today include Southern Copper Corp. (NYSE: SCCO) restarted as ‘equal weight’ with a $35 target price at Morgan Stanley; Amgen Inc. (NASDAQ: AMGN) raised to ‘neutral’ with a target price of $57 at Goldman Sachs; and Discover Financial Services (NYSE: DFS) raised to ‘buy’ at Stifel Nicolaus. Research in Motion Ltd. (NASDAQ: RIMM) received a number of ratings changes this morning following an uninspired earnings report and delayed release of its new operating system software: shares cut to ‘market perform’ at BMO Capital Markets; maintained as ‘hold’ at Needham; maintained as ‘neutral’ at Credit Suisse; maintained ‘hold’ with lowered price target of $15 at Canaccord Genuity.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Research in Motion Ltd. is down more than -11.5% at $13.38, after posting a new 52-week low of $13.12; Darden Restaurants Inc. (NYSE: DRI) is down -0.5% at $43.52; Steward Enterprises, Inc. (NASDAQ: STEI) is down more than -1.5% at $5.41; Hovananian Enterprises Inc. (NYSE: HOV) is down more than -4% at $1.29; and Quiksilver Inc. (NYSE: ZQK) is up more than 11% at $3.42.

Other standouts from today include the following stocks:

ISTA Pharmaceuticals Inc. (NASDAQ: ISTA) is up nearly 71% at $6.65. The eye-care drug company is the target of a hostile takeover bid from Valeant Pharmaceuticals International Inc. (NYSE: VRX) at a 68% premium to last night’s closing share price, or $6.50/share. More coverage here.

RSC Holdings Inc. (NYSE: RRR) is up more than 57% at $17.88, a new 52-week high. The construction and industrial equipment rental company is being acquired by competitor United Rentals Inc. (NYSE: URI) for $18/share, or about $1.9 billion in cash and stock.

Morton’s Restaurant Group Inc. (NYSE: MRT) is up nearly 33% at $$6.85. The steakhouse chain has agreed to an all-cash acquisition by privately held Landry’s Inc. at $6.90/share, for a total price of about $116.6 million.

Inhibitex Inc. (NASDAQ: INHX) is down more than -20.5% at $10.32. The biopharmaceutical firm is being hit with concerns over a new hepatitis C drug following the withdrawal of a rival drug discovered to impair liver function.

CryptoLogic Ltd. (NASDAQ: CRYP) is up more than 42% at $2.25, after posting a new 52-week high of $2.30 earlier today. The online gambling software maker is expected to get a takeover offer from Amaya Gaming Group (OTC: AMYGF) worth about $34.5 million.

Cobalt International Energy Inc. (NYSE: CIE) is up more than 21% at $10.90. The oil & gas E&P company was able to extend its lease on a deepwater rig from Transocean Ltd. (NYSE: RIG) that enables the company to continue exploring for two prospects offshore of Angola that the company believes may hold up to 2 billion barrels of crude.

Stay tuned for Monday. Richmond Federal Reserve Bank President Jeffrey Lacker is speaking in Charlotte, NC. Here are other noteworthy events on the schedule (all times Eastern):

10:00 a.m. – National Association of Builders housing market index
11:30 a.m. – 3- and 6- month Treasury bill auction
1:00 p.m. – Two-year Treasury note auction

Have a great weekend.

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AAPL, AMGN, CIE, CRYP, DFS, DRI, HOV, INHX, ISTA, MRT, RIMM, RRR, SCCO, STEI, ZNGA, ZQK

Top Analyst Upgrades & Downgrades (AMGN, AAPL, CAP, DFS, NDRO, ITMN, LLTC, ERIC, M, MTOR, NTRS, OCN, RIMM, SCCO)

Administrator — Fri, 16 Dec 2011 13:27:00 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Friday morning.

Amgen Inc. (NASDAQ: AMGN) Raised to Neutral with $57.00 price target objective by Goldman Sachs.
Apple Inc. (NASDAQ: AAPL) was given an outrageous prediction as a possibility of a 50% correction by Saxo Bank.
CAI International Inc. (NYSE: CAP) named as the value stock of the day at Zacks Investment Research.
Discover Financial Services (NYSE: DFS) Raised to Buy at Stifel Nicolaus.
Enduro Royalty Trust (NYSE: NDRO) Started as Outperform at Keefe Bruyette & Woods.
InterMune Inc. (NASDAQ: ITMN) maintained Outperform at Credit Suisse after yesterday’s weakness but the report noted “We would NOT be buyers on weakness right now.” Also on InterMune, Canaccord Genuity reiterated a Buy rating but lowered its price target to $23.00 per share.
Linear Technology Corporation (NASDAQ: LLTC) Raised to Outperform from Perform at Oppenheimer.
LM Ericsson Telephone Co. (NASDAQ: ERIC) Cut to Neutral at UBS.
Macy’s, Inc. (NYSE: M) named as Bull of the Day at Zacks Investment Research.
Meritor, Inc. (NASDAQ: MTOR) Maintained as Underperform and named the Bear of the Day at Zacks Investment Research.
Northern Trust Corporation (NASDAQ: NTRS) Started as Market Perform at Wells Fargo.
Ocwen Financial Corp. (NYSE: OCN) Started as Buy with a $16.50 price target objective at Bank of America Merrill Lynch.
Research in Motion Limited (NASDAQ: RIMM) Cut to Market Perform at BMO Capital Markets; maintained Hold at Needham; maintained Neutral at Credit Suisse; Lower target by Deutsche Bank; maintained Hold and lowered target to $15 at Canaccord Genuity.
Southern Copper Corporation (NYSE: SCCO) resumed with an Equal Weight rating and a $35.00 price target objective at Morgan Stanley.

JON C. OGG

Filed under: Analyst Calls Tagged: AAPL, AMGN, CAP, DFS, ERIC, ITMN, LLTC, M, MTOR, NDRO, NTRS, OCN, RIMM, SCCO

24/7 Wall St. Closing Bell (CSCO, FSLR, SI, BRCM, AFFY, DFS, FDX, PIR, SCHL, WGO, SONO, NVLS, GEVO, ZOLL, BPAX, PEIX)

Paul Ausick — Thu, 15 Dec 2011 21:05:03 +0000

US markets opened fast this morning, up nearly 1% in the first hour of trading before giving most of the gain back by mid-morning and then wandering around a gain of less than 0.5% for the rest of the day. Better manufacturing data from Europe, and solid manufacturing gains in the US helped the market in the early going. The US dollar was down against the euro, the yen, and the British pound. Crude oil prices fell today, with WTI down more than -1.5% at $93.44/barrel and Brent down about -0.9% at $103.33. Gold continued its slide as well today, down more than -1% at $1,568.80/ounce.

The unofficial closing bells put the DJIA up nearly 47 points to 11,869.95 (0.39%), the NASDAQ rose nearly 2 points (0.07%) to 2,541.01, and the S&P 500 rose 0.33% or about 4 points to 1,215.83.

There were several analyst upgrades and downgrades today, including Cisco Systems Inc. (NASDAQ: CSCO) started as ‘buy’ at Nomura. Other ratings actions today include First Solar Inc. (NASDAQ: FSLR) cut from ‘buy’ to ‘neutral’ at R.W. Baird; Siemens AG (NYSE: SI) cut from ‘buy’ to ‘neutral’ at Goldman Sachs; Broadcom Corp. (NASDAQ: BRCM) raised to ‘outperform’ at Wells Fargo; and Affymetrix Inc. (NASDAQ: AFFY) raised from ‘neutral’ to ‘buy’ at Goldman Sachs.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Discover Financial Services (NYSE: DFS) is down -3.2% at $23.06; FedEx Corp. (NYSE: FDX) is up almost 8% at $83.45; Pier 1 Imports, Inc. (NYSE: PIR) is up 0.23% at $13.17; Scholastic Corp. (NASDAQ: SCHL) is up more than 4% at $26.73; and Winnebago Industries, Inc. (NYSE: WGO) is down -0.15% at $6.80.

Other standouts from today include the following stocks:

SonoSite Inc. (NASDAQ: SONO) is up more than 27% at $53.68, a new 52-week high. The ultrasound device maker has been acquired by Japan’s Fujifilm Holdings Inc. for $54/share, or about $995 million. Our coverage is here.

Novellus Systems, Inc. (NASDAQ: NVLS) is up more than 17% at $40.68, after posting a new 52-week high of $42.50 earlier today. The semiconductor equipment maker is being acquired by Lam Research Corp. (NASDAQ: LRCX) for $3.3 billion in an all-stock deal. More coverage here.

Gevo Inc. (NASDAQ: GEVO) is up more than 13.5% at $6.41. The biofuel and chemical company signed an agreement with The Coca-Cola Co. (NYSE: KO) to develop a new bio-derived plastic bottle.

Zoll Medical Corp. (NASDAQ: ZOLL) is up more than 29% at $60.47, after posting a new 52-week high earlier today of $63.86. The medical device maker’s wearable defibrillator has been re-affirmed for Medicare coverage.

BioSante Pharmaceuticals, Inc. (NASDAQ: BPAX) is down more than -77% at $0.48, after posting a new 52-week low of $0.46 earlier today. The biopharmaceutical company reported that its experimental drug to enhance libido in post-menopausal women failed a late-stage trial.

Pacific Ethanol Inc. (NASDAQ: PEIX) is down nearly -18% at $0.87. The ethanol maker announced the completion of a sale of about 12.6 million shares and warrants to 11 private investors for just over $8 million in cash.

Stay tuned for Friday. Chicago Federal Reserve Bank President Charles Evans and Dallas Federal Reserve Bank President Richard Fisher are speaking tomorrow. Here is another other noteworthy event on the schedule (all times Eastern):

8:30 a.m. – Consumer price index for November released

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AFFY, BPAX, BRCM, CSCO, DFS, FDX, FSLR, GEVO, NVLS, PEIX, PIR, SCHL, SI, SONO, WGO, ZOLL

24/7 Wall St. Closing Bell (GE, YHOO, YUM, MO, AVP, GRPN, JOY, SYNO, ADBE, DFS, FDX, FSLR, AVP, EONC, SGI, SPWR, RVSN)

Paul Ausick — Wed, 14 Dec 2011 21:09:02 +0000

Equity markets started the day down and stayed there all day. Traders were mirroring the action on European and Asian markets, which all settled down before the US markets opened this morning. Falling crude oil prices led most commodities down, but had a favorable impact on airlines stocks that may not have to pay so much for fuel next month. A record low yield on 30-year Treasury bonds pushed stock prices up slightly in the afternoon, but the effect was short lived. WTI crude oil is down more than -5% at $94.93/barrel, and Brent crude oil is also down nearly -4.7% at 104.81/barrel. Gold is down more than -5% at $1,576.40, and looks to settle at its lowest point since mid-July.

The unofficial closing bells put the DJIA down nearly 132 points to 11,823.48 (-1.1%), the NASDAQ fell nearly 40 points (-1.55%) to 2,539.31, and the S&P 500 fell -1.13% or nearly 14 points to 1,211.82. So far this week, the indexes have closed lower every day.

There were several analyst upgrades and downgrades today, including General Electric (NYSE: GE) reiterated as ‘outperform’ with the target price raised to $22 at Credit Suisse. Other ratings actions today include Yahoo Inc. (NASDAQ: YHOO) restarted as ‘sell’ at Goldman Sachs; Yum! Brands Inc. (NYSE: YUM) reiterated as ‘buy’ and target price raised to $60 at Argus; Altria Group Inc. (NYSE: MO) cut to ‘hold’ at Stifel Nicolaus; and Avon Products Inc. (NYSE: AVP) raised to ‘outperform’ at BMO Capital. Groupon Inc. (NASDAQ: GRPN) received ratings from a slew of analysts this morning, and the results are in our full ratings coverage.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Joy Global Inc. (NYSE: JOY) is down nearly -11% at $75.54 and Synovis Life Technologies Inc. (NASDAQ: SYNO) is up 0.2% at $27.83. Synovis received a buyout offer yesterday at $28/share from Baxter International Inc. (NYSE: BAX). Tomorrow’s big earnings releases come from Adobe Systems Inc. (NASDAQ: ADBE), Discover Financial Services (NYSE: DFS), and Fedex Corp. (NYSE: FDX).

Other standouts from today include the following stocks:

First Solar Inc. (NASDAQ: FSLR) is down more than -21% at $33.46, after posting a new 52-week low of $33.08 earlier today. The solar PV maker lowered guidance this morning. See our coverage here.

Avon Products Inc. (NYSE: AVP) is up almost 5.5% at $17.02. The cosmetics company is replacing CEO Andrea Jung. We have more on the story here.

eOn Communications Corp. (NASDAQ: EONC) is up about 108% at $2.12. The online marketing company reported good earnings yesterday, but not that good. Investors must be anticipating a buyout offer.

Silicon Graphics International Corp. (NASDAQ: SGI) is down nearly -17.5% at . The computer maker’s president/CEO has resigned, effective January 1st, to take a position as president and CEO at another company.

SunPower Corp. (NASDAQ: SPWR) is down more than -15% at $5.35, after posting a new 52-week low of $5.34. The solar maker is caught in the general sell-off of solar stocks following the lowered guidance from First Solar.

RADVision Ltd. (NASDAQ: RVSN) is down nearly -12% at $8.57. The communications equipment maker’s shares jumped more than 14% yesterday on talk of a buyout by Avaya. The falling share price is very likely discounting yesterday’s rumor.

Stay tuned for a busy Thursday. Here are some other noteworthy events on the schedule (all times Eastern):

8:30 a.m. – New unemployment claims report
8:30 a.m. – Producer price index report
8:30 a.m. – Empire State Manufacturing survey
9:15 a.m. – Industrial production report
9:45 a.m. – Bloomberg consumer comfort index
10:00 a.m. – Philadelphia Federal Reserve survey
10:30 a.m. – EIA weekly natural gas report
1:00 p.m. – 5-year TIPS auction
4:30 p.m. – Federal Reserve balance sheet and money supply report

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: ADBE, AVP, DFS, EONC, FDX, FSLR, GE, GRPN, JOY, MO, RVSN, SGI, SPWR, SYNO, YHOO, YUM

Rising Credit Card Use May Be Mixed Blessing (MA, V, AXP, COF, DFS, BAC, JPM, C)

Paul Ausick — Wed, 02 Nov 2011 14:39:18 +0000

MasterCard Inc. (NYSE: MA) absolutely crushed estimates this morning, reporting third-quarter EPS of of $5.63 on revenue of $1.82 billion. Consensus estimates were aiming for EPS of $4.81 on $1.7 billion in revenue. The company processed nearly 21% more total transactions and revenue from debit card transactions rose 23%. While more transactions and higher spending are good for the card companies, they could raise a caution flag for future delinquencies and defaults.

Other card issuers pretty much set the stage for Mastercard. Visa Inc. (NYSE: V) reported EPS of $1.27 on revenue of $2.38 billion, beating expected EPS and narrowly missing revenue estimates. A week earlier, American Express Co. (NYSE: AXP) posted EPS of $1.03, topping estimates of $0.96. Both Visa and American Express noted transaction growth and higher consumer spending. Capital One Financial Corp. (NYSE: COF) also beat EPS and revenue estimates in the third quarter. Discover Financial Services (NYSE: DFS) winds up its 2011 fiscal year this month, and is expected to report EPS of $0.91 on revenue of $1.81 billion.

Credit card lenders including American Express, Capital One, Discover, and banks like Bank of America Corp. (NYSE: BAC), JP Morgan Chase & Co. (NYSE: JPM), and Citigroup Inc. (NYSE: C) reported a slight rise in delinquencies for September although write-offs fell. American Express’s delinquency rate rose from 1.4% in August to 1.5%, but write-offs fell from 2.7% to 2.4%. Capital One’s delinquency rate rose from 3.43% to 3.65%, while write-offs fell from 4.1% to 3.9%. Discover’s delinquency rate rose fractionally, and its write-off rate fell from 3.6% to 3.17%. The banks followed the pattern, but write-off rates are higher, with BofA at 5.99%, Chase at 4.13%, and Citi at 5.87%.

The concern is that the uptick in credit card use will lead to a similar uptick in delinquencies and defaults. Credit card use far outstripped debit card use last quarter, indicating either that consumers didn’t have the cash or that they were voting against the threatened imposition of fees for debit card use.

High unemployment and stagnant wages are the likeliest causes of the increase in credit card use. Now that the holiday season is truly with us, consumers will be spending more and it’s not much of a stretch to believe that credit cards will play a significant role in that spending. Paying the bills will come later.

For Mastercard and Visa, neither of which is exposed to non-payment of credit card bills, delinquencies and defaults may take a longer time to affect earnings, but if banks are forced to tighten requirements, fewer credit and debit cards will be issued and the transaction companies will feel the pinch.

Mastercard shares are up about 8% in the first hour of trading this morning, at $361.36, in a 52-week range of $215.00-$364.80. Visa shares are up more than 2.5%, at $92.34, in a 52-week range of $66.50-$95.87. American Express stock is up more than 2.5% as well, at $50.23, in a 52-week range of $41.25-$53.80. Discover shares are up nearly 2%, at $23.30, in a 52-week range of $17.84-$$27.92.

Paul Ausick

Filed under: Banking, Earnings, Economy, Financial Stocks Tagged: AXP, BAC, C, COF, DFS, JPM, MA, V

Top Analyst Upgrades & Downgrades (CVX, CMG, COST, DE, XOM, DFS, LEAP, NWS.A, NEM, ORCL, RL, PLCM, PCG, RYAAY, SNE, WAG)

Administrator — Thu, 06 Oct 2011 12:23:05 +0000

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

Chevron Corporation (NYSE: CVX) Cut to Underweight at JPMorgan.
Chipotle Mexican Grill, Inc. (NYSE: CMG) Cut to Market Perform at William Blair.
Costco Wholesale Corporation (NASDAQ: COST) Cut to Market Perform at William Blair; Reiterated Outperform at Credit Suisse; Raised target to $90 at Argus.
Deere & Co. (NYSE: DE) Maintained Neutral but cut estimates and target to $87 at Credit Suisse.
Exxon Mobil Corporation (NYSE: XOM) Cut to Underweight at JPMorgan.
Discover Financial Services (NYSE: DFS) named Bull of the Day at Zacks.
Leap Wireless International Inc. (NASDAQ: LEAP) maintained Neutral but target to $4 from $10 at Credit Suisse.
News Corporation (NASDAQ: NWS.A) Removed from the Conviction Buy List at Goldman Sachs.
Newmont Mining Corporation (NYSE: NEM) named Value stock of the day at Zacks.
Oracle Corporation (NASDAQ: ORCL) Reiterated Outperform on Focus List at Credit Suisse.
Polo Ralph Lauren Corp. (NYSE: RL) Raised to Buy at Citigroup.
Polycom Inc. (NASDAQ: PLCM) Raised to Buy at Argus.
PG&E Corporation (NYSE: PCG) Raised to Buy at Citigroup.
Ryanair Holdings plc (NASDAQ: RYAAY) Raised to Outperform at Credit Suisse.
Sony Corporation (NYSE: SNE) Cut to UNderperform at BofA/ML.
Walgreen Co. (NYSE: WAG) Cut to Neutral at BofA/ML.

JON C. OGG

Filed under: Analyst Calls Tagged: CMG, COST, CVX, DE, DFS, LEAP, NEM, NWS-A, ORCL, PCG, PLCM, RL, RYAAY, SNE, WAG, XOM

Top Debt & Credit Rating Agency Actions (IRM, DFS, EADSY, HLX, RDEN, YUM, MON, BBG, DYN, T)

Administrator — Tue, 20 Sep 2011 18:39:29 +0000

Debt and credit rating agencies made a number of changes yesterday, led by the downgrade of Italian sovereign debt by Standard & Poor’s. The agencies also issued changes to debt ratings for the following companies: Iron Mountain Inc. (NYSE: IRM), Discover Financial Services (NYSE: DFS), European Aeronautic Defence and Space Co. N.V. (OTC: EADSY), Helix Energy Solutions Group, Inc. (NYSE: HLX), Elizabeth Arden, Inc. (NASDAQ: RDEN), Yum! Brands Inc. (NYSE: YUM), Monsanto Co. (NYSE:MON), Bill Barrett Corp. (NYSE: BBG), Dynegy Inc. (NYSE: DYN), and AT&T (NYSE: T).

After US markets closed yesterday, S&P lowered its rating on Italy’s sovereign debt from ‘A+’ to ‘A’ with a negative outlook. In its report, S&P specified weakening economic growth prospects, its “fragile” government, and policy differences between the Berlusconi government and the parliament.

In what may be any rating agency’s first criticism at a government’s fiscal austerity measures, the ratings agency noted: “More subdued external demand, government austerity measures, and upward pressure on funding costs in both the public and private sectors will, in our opinion, likely result in weaker growth for the Italian economy compared with our May 2011 base-case expectations, when we revised the outlook to negative. We believe the reduced pace of Italy’s economic activity to date will make the government’s revised fiscal targets difficult to achieve.” In other words, spending cuts by the Italian government are likely to stall the country’s economic growth. Such a situation will make it nearly impossible for the country to meet its new fiscal targets.

Iron Mountain Inc. (NYSE: IRM) received a ‘B+’ rating from S&P on its proposed $300 million senior subordinated notes due in 2019. The agency also placed a ‘BB-’ rating and a negative outlook on Iron Mountain’s corporate credit.

Discover Financial Services (NYSE: DFS) received a ‘AAA’ rating from S&P on Discover Card Execution Note Services $800 million DiscoverSeries notes. These notes are asset-backed securities ultimately collateralized by “receivables generated from designated Discover Card accounts.”

European Aeronautic Defence and Space Co. N.V. (OTC: EADSY), maker of the Airbus aircraft, received an outlook upgrade from ‘stable’ to ‘positive’ from S&P. The agency reaffirmed its ‘A-/A-2′ long- and short-term corporate credit ratings on the company.

Helix Energy Solutions Group, Inc. (NYSE: HLX), an oil field services firm, received a corporate credit rating boost from ‘B’ to ‘B+ from S&P. The rating on the company’s senior secured debt was also raised to ‘BB-’ and unsecured debt was raised from ‘CCC+’ to ‘B-’.

Elizabeth Arden, Inc. (NASDAQ: RDEN) received an upgrade from ‘stable’ to ‘positive’ from S&P. The agency also affirmed its ‘B+’ corporate credit rating.

Yum! Brands Inc. (NYSE: YUM) received a rating of ‘BBB-’ from S&P on a proposed offering of worth 350 million Chinese renminbi (about $55 million) in senior unsecured debt. The notes will rank equally with existing and future unsecured debt.

Monsanto Co. (NYSE:MON) received an ‘A2′ long-term debt and Prime-1 rating from Moody’s on its commercial paper.

Bill Barrett Corp. (NYSE: BBG) received a ‘B1′ rating from Moody’s on a proposed offering of $300 million in secured notes due 2019. Proceeds will be used to repay borrowing on the company’s revolving credit borrowings which funded acquisitions in 2011 and to support capital spending above operating cash flow. The company’s outlook retained a ‘stable’ rating.

Dynegy Inc. (NYSE: DYN) was placed on Rating Watch Negative by Fitch Ratings following the announcement of a $1.25 billion exchange offer. The offer includes debt with interest rates from 7.125% to 8.750%, all of which will be exchanged for new 10% senior secured notes.

AT&T (NYSE: T) was reaffirmed on Rating Watch Negative by Fitch Ratings. The company’s Issuer Default Ratings and senior unsecured debt rating have been rated ‘A’.

Many debt and credit ratings upgrades are noise, but there is one thing that usually rings true. As companies see their credit ratings rise, that lowers their borrowing costs, and that in effect raises their earnings. Credit ratings matter more now that America is no longer “AAA.”

Paul Ausick

Filed under: Analyst Calls, Bonds, Research Tagged: BBG, DFS, DYN, EADSY, HLX, IRM, MON, RDEN, T, YUM

Top Earnings Previews For The Week Ahead (LEN, ADBE, CCL, CAG, JEF, ORCL, BBBY, GIS, RHT, KMX, DFS, FDX, NKE, UA, RAD)

Administrator — Fri, 16 Sep 2011 18:07:52 +0000

The coming week is going to feel like a mini earnings season. We have many sector leaders reporting earnings and the fallout (or benefits) could be widespread. On deck are key earnings from the following: Lennar Corporation (NYSE: LEN); Adobe Systems Inc. (NASDAQ: ADBE); Carnival Corporation (NYSE: CCL); ConAgra Foods Inc. (NYSE: CAG); Jefferies Group Inc. (NYSE: JEF); Oracle Corporation (NASDAQ: ORCL); Bed Bath & Beyond Inc. (NASDAQ: BBBY); General Mills Inc. (NYSE: GIS); Red Hat Inc. (NYSE: RHT); CarMax Inc. (NYSE: KMX); Discover Financial Services (NYSE: DFS); FedEx Corporation (NYSE: FDX); Nike Inc. (NYSE: NKE); and Rite Aid Corporation (NYSE: RAD).

We have broken these out by day and included consensus earnings and revenue estimates from Thomson Reuters. We have also added in a price and recent trading activity and even added in the consensus analyst price targets. Many of these also have some added color for traders to consider about the earnings reports.

Monday

Lennar Corporation (NYSE: LEN) has estimates of $0.10 EPS and $810.2 million in revenues; next quarter estimates are $0.19 EPS and $908.35 million in revenues. Shares are trading around $13.90, the 52-week trading range is $12.39 to $21.54. Wait a minute… EARNINGS rather than losses? Go figure.

Tuesday

Adobe Systems Inc. (NASDAQ: ADBE) has estimates of $0.54 EPS and $1.03 billion in revenues; next quarter estimates are $0.59 EPS and $1.07 billion in revenues. Shares are trading around $25.50, the 52-week trading range is $22.67 to $35.99. Analysts still have a consensus target above $34.00, which seems a bit optimistic in the new normal where Apple’s mobility service is still crimping Flash.

Carnival Corporation (NYSE: CCL) will show the cruise industry who is boss, maybe. The estimates are $1.63 EPS and $4.91 billion in revenues; next quarter estimates are $0.36 EPS and $3.89 billion in revenues. Shares are trading around $33.50, the 52-week trading range is $28.96 to $48.14. Keep in mind that this report is the King-Maker quarter that dictates the earnings for the full year due to the summer travel months. With an estimate of $1.63 EPS for the quarter, the full year is expected to be $2.46 EPS. Analysts have a consensus target of $almost $44.75.

ConAgra Foods Inc. (NYSE: CAG) has estimates of $0.31 EPS and $2.96 billion in revenues; next quarter estimates are $0.46 EPS and $3.3 billion in revenues. Shares are trading around $24.00, the 52-week trading range is $21.02 to $26.60, and the consensus analyst target is $28.13.

Jefferies Group Inc. (NYSE: JEF) has estimates of $0.26 EPS and $665.6 million in revenues; next quarter estimates are $0.36 EPS and $746.1 million in revenues. Shares are trading around $14.65, the 52-week trading range is $13.85 to $27.12, and the consensus target is $22.22. Jefferies has not been immune from the market’s pounding of banks and brokerage firms, but this is one broker and i-banker expected to grow.

Filed under: Calendar, Earnings Tagged: ADBE, BBBY, CAG, CCL, DFS, FDX, GIS, JEF, KMX, LEN, NKE, ORCL, RAD, RHT, UA

High Unemployment Could Provide a Lift for Some Stocks (V, MA, DFS, AXP, MCD, YUM, WEN, COST, DG, WMT)

247wallst — Fri, 05 Aug 2011 13:23:50 +0000

Many economists don’t believe that the US debt ceiling is the biggest problem the country faces. In their view the most compelling issue is unemployment, currently at 9.1% and, given the nearly inevitable contraction in the economy brought on by lower federal government spending, more likely to rise than to fall in the near term. While it’s hard to think of in these terms, there are some firms that could actually prosper from high unemployment — not necessarily by taking advantage of other people’s misery but by the nature of the businesses they are in.

Financial services firms that offer consumers revolving credit are at the top of the list. Visa Inc. (NYSE: V), Mastercard Inc. (NYSE: MA), Discover Financial Services (NYSE: DFS),and American Express Co. (NYSE: AXP) lead the list. Consumer-oriented companies that offer low-priced goods and services are also serious contenders for a boost. These include McDonald’s Corp. (NYSE: MCD), Yum! Brands, Inc. (NYSE: YUM), The Wendy’s Co. (NYSE: WEN), Costco Wholesale Corp. (NASDAQ: COST), Dollar General Corp. (NYSE: DG), and Wal-Mart Stores Inc. (NYSE: WMT).

Credit card debt in the US has fallen from a high of $957.5 billion in 2008 to $790 billion in April of this year. [http://www.federalreserve.gov/releases/g19/current/] The Federal Reserve Bank’s preliminary estimate for May indicated a rise in revolving debt to $793 billion. As more people are unemployed or stay unemployed longer, they often have no choice but to access any revolving credit that is available to them. The Fed’s May estimate indicates an annual percentage increase in revolving credit of 5.1%, the largest positive move since 2007, when revolving credit grew at an annual rate of 8.1%.

The national average credit card lending rate is nearly 15%, while the lowest rate available is near 11%, not including the teaser rates. The rate rises to nearly 25% for consumers with bad credit. One could argue that the rates should be lower, but as the recent growth in credit use demonstrates, consumers will pay the market rate when they have no other choice.

Because the unemployed still need to eat and wear clothes, low-priced stores ought to get the boost they felt back in 2008 and 2009, when consumers shunned the mid-priced outlets and shopped instead at Wal-Mart, Costco, and Dollar General stores, where everything from fresh vegetables to shoes cost less. Recent consumer movement away from some of these stores is very likely to reverse itself.

This morning’s report on non-farm payroll gains in July was slightly encouraging as the unemployment rate fell from 9.2% to 9.1%, and the country added 117,000 jobs. The drop in unemployment was mainly attributed to an increase in the number of people who are too discouraged to continue looking for work.

It is almost painful to make these observations because they are based on the misfortune and misery of millions of Americans. The country is staring another recessionary period right in the eye and, as always, there will be winners and losers.

Paul Ausick

Filed under: General Tagged: AXP, COST, DFS, DG, MA, MCD, V, WEN, WMT, YUM

Top Analyst Upgrades & Downgrades (ACTV, AUO, BBBB, CNK, CLWR, CLF, DFS, EK, FSL, GIS, MAS, RGC, SNDK, SBUX, UA, WCG, YNDX)

Administrator — Tue, 05 Jul 2011 12:01:10 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning.

The Active Network, Inc. (NYSE: ACTV) Started as Buy at BofA/ML; Started as Buy at Citigroup.
AU Optronics Corp. (NYSE: AUO) Cut to Neutral at Goldman Sachs.
Blackboard Inc. (NASDAQ: BBBB) dropped from Underperform at BofA/ML; Cut to Neutral at JPMorgan.
Cinemark Holdings Inc. (NYSE: CNK) Cut to Neutral at Janney.
Clearwire Corporation (NASDAQ: CLWR) Raised to Outperform with $6 target at Credit Suisse.
Cliffs Natural Resources (NYSE: CLF) Reinstated Buy with $118 target at BofA/ML.
Discover Financial Services (NYSE: DFS) named as Bull of the Day at Zacks.
Eastman Kodak Co. (NYSE: EK) Reiterated Hold at Argus.
Freescale Semiconductor Inc. (NYSE: FSL) Started as Buy at Citigroup; Started as Outperform at Credit Suisse.
General Mills, Inc. (NYSE: GIS) Cut to Neutral at Credit Suisse.
Masco Corporation (NYSE: MAS) Maintained Underperform as Bear of the Day at Zacks.
Regal Entertainment Group (NYSE: RGC) Cut to Sell at Janney Capital.
SanDisk Corporation (NASDAQ: SNDK) Raised to Buy at Deutsche Bank.
Starbucks Corporation (NASDAQ: SBUX) Reiterated Buy but raised target to $45 at Argus.
Under Armour, Inc. (NYSE: UA) Called out as “Overvalued” in the weekend Barron’s.
WellCare Health Plans, Inc. (NYSE: WCG) called top Value at Zacks.
Yandex N. V. (NASDAQ: YNDX) Started as Overweight at Morgan Stanley; Started as Neutral at Goldman Sachs.

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JON C. OGG

Filed under: Analyst Calls Tagged: ACTV, AUO, BBBB, CLF, CLWR, CNK, DFS, EK, FSL, GIS, MAS, RGC, SBUX, SNDK, UA, WCG, YNDX