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Public Offering Floodgates Open Wide (CUZ, DHX, DFS, EPR, FNSR, FPO, GEL, G, GLP, HIG, IRDM, LXRX, NVAX, ORG, SATC, TTMI)

Administrator — Wed, 17 Mar 2010 12:56:49 +0000

If you think you are alone in noticing that the markets have held up extremely well, you better take a look and see what managers and officers of public companies are doing on capital raises. There is a wave of secondary offerings this week either that already priced or on deck from companies such as Cousins Properties Incorporated (NYSE: CUZ), Dice Holdings Inc. (NYSE: DHX), Discover Financial Services (NYSE: DFS), Entertainment Properties Trust (NYSE: EPR), Finisar Corp. (NASDAQ: FNSR), First Potomac Realty Trust (NYSE: FPO), Genesis Energy LP (NYSE: GEL), Genpact Ltd. (NYSE: G), Global Partners LP (NYSE: GLP), Hartford Financial Services Group Inc. (NYSE: HIG), Iridium Communications Inc. (NASDAQ: IRDM), Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX), Novavax, Inc. (NASDAQ: NVAX), Oriental Financial Group Inc. (NYSE: OFG), Satcon Technology Corporation (NASDAQ: SATC), and TTM Technologies, Inc. (NASDAQ: TTMI) all either have priced deals or pending deals in the world of secondary stock offerings.

As of last night, the week’s offerings were literally a floodgate of secondary offerings. It is almost worrisome when you see this many shares being sold. We have included the appropriate color where applicable, as well as applicable price reactions, comparisons to market cap, the underwriting team on each, and more. The most difficult notion to fathom here is that these are just the decent-sized offerings to large offering from companies which did more than just an automatic shelf registrations. SIXTEEN deals here alone….

Cousins Properties Incorporated (NYSE: CUZ) filed on Tuesday to sell up to $500 million in any combination of Common or Preferred Stock, Warrants, Debt and/or Depositary Shares. The stock held up fine with only a 6.3% drop to $7.85 on Tuesday versus a 52-week range of $5.97 to $10.95. No underwriters were named for the REIT’s securities sale for ‘general corporate purposes’ and the market cap as of Tuesday was $783 million.

Dice Holdings Inc. (NYSE: DHX) registered to sell up to $50 million in common stock for holders, although the prospectus noted common and preferred stock. It also said that any proceeds to the company would be for for ‘general corporate purposes,’ which was inclusive of debt repayment, working capital and/or capital expenditures. Dice shares were down 1.1% to $7.61 n Tuesday and the market cap was about $475 million.

Discover Financial Services (NYSE: DFS) received approval to pay back its TARP obligations. After earnings last night the credit card issuer said it would be selling $350 million in subordinated debt to repay the TARP. Shares were down 1.5% at $15.07 on early look but that is after earnings and may be only a lesser event in the grand scheme of things.

Entertainment Properties Trust (NYSE: EPR) listed almost 6.3 million shares for sale for a value of close to $250 million in common shares. The difference here is that the offering is said to be dividend reinvestment component and a direct share purchase component shares, so these may actually not be sold… ” 8,500,000 common shares to be offered for purchase under the Plan, including 2,202,093 common shares that were previously registered but not sold.”

Finisar Corp. (NASDAQ: FNSR) filed on Monday to sell 7.2 million shares of common stock. Tuesday brought about a drop down 3.4% to $14.30 on above-average share volume. This one is after a significant recovery because its 52-week trading range is $2.56 to $14.90 and its new market cap was $931 million as of Tuesday’s close. Morgan Stanley and Jefferies & Company are joint book-running managers; Piper Jaffray and Morgan Keegan are co-managers.

Filed under: IPOs, Secondary Offering, Trading Alert Tagged: CUZ, DFS, DHX, EPR, FNSR, FPO, G, GEL, GLP, HIG, IRDM, LXRX, NVAX, ORG, SATC, TTMI

Capitol One: Keep Track Of Charge-Offs

247wallst — Tue, 16 Feb 2010 18:41:28 +0000

Capital One Financial (NYSE:COF) just announced that credit card defaults rose to 5.80% in January from 5.78% in December. The charge off rate was not good either rising from 10.14% in December to 10.41% in January. Yet, Capital One and some other lenders in the financial group initially rallied on an analyst upgrade and a “trading call” based on valuation. As the third largest issuer of Visa cards Capital One has a lot of exposure to the consumer credit markets and all the factors that affect it. Though some financial stocks may have “bottomed out” and taken “record charges”, there are still plenty of obstacles in the consumer credit business for Capital One to face.

The key factor in financial distress is unemployment. Unemployment takes time to flow through and impact financial institutions like Capital One. Therefore one should look not only at the unemployment rate but when the jobs were lost. Credit card loans charge off when they are 180 days delinquent (6 months). So today’s charge off is related last year’s job losses. In June through December of 2009 unemployment was in the 9% to 10% range with large initial claims. Many of the people represented in these numbers will default on their credit cards over time. Capital One is sitting on a large potential pipeline of problem consumer loans. Investors should note that during January 2010 credit card accounts that were 30 days delinquent increased, which indicate future charge offs. Credit card problems may not yet have peaked at Capital One.

Financial institutions such as Capital One, Bank of America (NYSE: BAC) and Discover Financial Services (NYSE: DFS) also face a host of problems from the current economic environment. In addition to loan losses financial companies are seeing weak loan demand and have a problem finding quality borrowers. This affects Capital One’s ability to grow and diversify its loan portfolio so that new revenue streams can offset loan charge- offs. The IRS is also taxing debt write-offs that credit card companies have given customers this year, another short-term obstacle for the debt ridden consumer. Then there is the potential problem of rising interest rates on credit cards and mortgages, not to mention more government regulation. Collectively these short and long-term obstacles represent a lot of uncertainty for the consumer loan market.

There may well be financial companies that have low-valuations or might be a good trade. Yet, investors would do well to take a look at the pipeline for potential problems at Capital One, which is large and may be growing.

Steve Gear

Filed under: Financial Stocks Tagged: BAC, COF, DFS

Top Analyst Upgrades and Downgrades (AMD, AA, AXP, APC, COF, DFS, XOM, FCX, MA, Q, SCHN, PCU, V)

247wallst — Tue, 02 Feb 2010 13:35:18 +0000

These are this Tuesday’s top analyst upgrades, downgrades, and initiations seen in early all Street research calls:

Advanced Micro Devices (NYSE: AMD) Cut to Conviction Sell at Goldman Sachs.
Alcoa Inc. (NYSE: AA) Raised to Buy at UBS.
American Express (NYSE: AXP) Raised to Buy at BofA/Merrill Lynch.
Anadarko Petroleum (NYSE: APC) Raised to Buy at Lazard Capital.
Capital One Financial (NYSE: COF) Raised to Buy at BofA/Merrill Lynch.
Discover Financial (NYSE: DFS) Raised to Buy at BofA/Merrill Lynch.
ExxonMobil Corp. (NYSE: XOM) Raised to Buy at BofA/Merrill Lynch.
Freeport-McMoRan (NYSE: FCX) Raised to Buy at Citigroup.
Mastercard (NYSE: MA) Started as Outperform at Bernstein.
Qwest Communications (NYSE: Q) Raised to Overweight at Piper Jaffray; Maintained Sell but removed from Conviction Sell at Goldman Sachs.
Schnitzer Steel (NASDAQ: SCHN) Raised to Buy at UBS.
Southern Copper Corp. (NYSE: PCU) Raised to Buy at Citigroup.
Visa Inc. (NYSE: V) Started as Outperform at Bernstein.

You are invited to join our free daily email distribution list to hear about top analyst upgrades and downgrades, IPOs and secondary offerings, ongoing day trader and options trader alerts, stock and market rumors, Buffett and guru investor news, M&A and more.

JON C. OGG
FEBRUARY 2, 2010

Filed under: Analyst Calls Tagged: AA, AMD, APC, AXP, COF, DFS, FCX, MA, PCU, Q, SCHN, V, XOM

Major Earnings on Deck This Coming Week (ADBE, BBY, KR, ORCL, DFS, FDX, PALM, PIR, JAVA)

247wallst — Sat, 12 Sep 2009 16:29:27 +0000

We have a little flurry of key earnings coming this week. We have provided detailed earnings estimates with Thomson Reuters consensus figures, with our own color for the recent performance, the charts, options, and other critical data when and where it stood out. The companies covered are Adobe Systems Inc. (NASDAQ: ADBE), Best Buy Co. (NYSE: BBY), The Kroger Co. (NYSE: KR), Oracle Corp. (NASDAQ: ORCL), Discover Financial Services (NYSE: DFS), FedEx (NYSE: FDX), Palm, Inc. (NASDAQ: PALM), and Pier 1 Imports, Inc. (NYSE: PIR).

On Tuesday, September 15, we have earnings from the likes of Adobe Systems Inc. (NASDAQ: ADBE), Best Buy Co. (NYSE: BBY), and The Kroger Co. (NYSE: KR).

Adobe Systems Inc. (NASDAQ: ADBE) is up about 125% since the March lows and is now at levels not seen since late 2008. The CAD, graphics, and Acrobat software maker is expected to post earnings of $0.34 EPS on $686.16 million in revenues. The company usually offers guidance. Estimates for the next report in 3 months are $0.37 EPS and $719.23 million in revenues. Next quarter also marks its year-end, and those estimates are $1.51 EPS and $2.9 billion in revenues. The bar has to be set high for this company considering that it has rallied so much and since it trades at 23.3-times current year earnings. This one has rallied so much that its 50-day moving average is down at $31.42 and the more important 200-day moving average is down at $25.29. We would only get excited here if Adobe significantly raised guidance or if unveiled a new billion dollar business line.

Best Buy Co. (NYSE: BBY) usually reports early in morning, and is up sharply by almost 150% from its lows. Estimates are $0.42 EPS on $10.77 billion in revenues. The estimates are $0.39 EPS and $11.7 billion in revenues for the next quarter. We would note that call options activity was very active on Friday and it looks as though the options traders are braced for a move of up to $2.00 or more in either direction.

The Kroger Co. (NYSE: KR) may be interesting here as this company has failed to participate in the rally and as its business of selling food can be hit by spending trends. Estimates are $0.44 EPS and $18.17 billion in revenues, while next quarter estimates are $0.40 EPS on $17.98 billion in revenues.At $21.78, the 52-week trading range is $19.39 to $29.59. This is nestled in between its key moving averages as the 50-day moving average is $21.40 and the 200-day moving average is $22.31. More importantly is that this one has failed to break above the $22.00 to $22.50 mark all summer.

Wednesday, September 16, has the software giant Oracle Corp. (NASDAQ: ORCL) on deck for earnings after the close. The delay of the Sun Microsystems (NASDAQ: JAVA) merger seems more critical for Sun than Oracle, but will be a thorn in the side either way because it is just a distraction away from core operations and it delays the integration. Larry Ellison and friends are expected to post $0.30 EPS and $5.24 billion in revenues. The company may hold off giving formal guidance because of the Sun delay, but next quarter’s estimates are $0.36 EPS and $5.72 billion in revenues. What is interesting here is how much larger the company will be post-merger. The fiscal May 2010 revenue is expected to be $23.90 billion, but the fiscal June-2010 revenue estimate for Sun is $10.5 billion. This merger is going to probably take Oracle out of the shopping game for some time. Oracle will get much larger when (and if) the weasels in the E.U. regulatory body figure out that making a company like Sun stay independent considering the notion that Sun just can’t cut it on its own. Oracle’s market cap is now almost $115 billion and at $22.86 it is just under its year high as the 52-week trading range is $13.80 to $22.95. Actually, this hit a new 52-week high on Friday…

Thursday, September 17 is going to be another big day with Discover Financial Services (NYSE: DFS), FedEx (NYSE: FDX), Palm, Inc. (NASDAQ: PALM), and Pier 1 Imports, Inc. (NYSE: PIR) reporting earnings.

Discover Financial Services (NYSE: DFS) is on deck to report Thursday and this is “just another financial stock up over 200% from its lows” as far as we are concerned. At $14.71, its 52-week trading range is $4.73 to $17.70. This was almost $25.00 2 years ago. This credit card lender is more on the lower and middle market consumer, which gives it an almost antithesis of American Express characteristic other than the notion that more ex-AmEx customers are likely going to be Discover customers eventually. With it still expected to lose money for the quarter, we are failing to get excited here. Estimates are -$0.13 EPS and $743.2 million in revenues.

FedEx (NYSE: FDX) was likely going to be a key stock to watch but the company raised guidance Friday morning. We did note that there was actually a very mixed performance in the delivery and transportation players during the Friday trading session, so this sector will be key to watch to see if it can continue running…. Dow Theorists stay tuned.

Palm, Inc. (NASDAQ: PALM) is perhaps the biggest battleground stock of them all to report this coming week. Forget about its earnings, because what will drive this one is how many of those Palm Treo smartphones it has sold and shipped. The recent price cuts for Treo and possible could shoulder from the market of this scaled-down Palm Pixi to to boost Palm’s WebOS software are possible red flags. Just an opinion here, but is the Pixi perhaps one of the lamest names for a phone yet??? The stock closed Friday at $13.91 and the 52-week trading range is $1.14 to $16.80, but the 50-day day moving average is $14.35 and that moving average has been a bumper-car game for the stock since late July. Analysts expect -$0.25 EPS on $304.9 million in revenues. The biggest issue here is the huge short interest of over 47.2 million shares. If the fully diluted calculations are correct, that means that 40% of the float is now short. So while we are against the company’s performance, this huge short interest can create one monster rally even if the news is not that good as all the shorts cover and run home to mama.

Pier 1 Imports, Inc. (NYSE: PIR) is on deck for earnings and is a total wild card because of a never-ending turnaround and because it has traded all over the place. The company has been paring down what it can, making cuts where it can, and working on its inventories and its balance sheet. Estimates are -$0.22 EPS on 281.9 million in revenues, but be advised that it is very thinly covered. A $2.60, its 52-week trading range is $0.10 to $5.70.

We are getting close to the end of all the earnings, ad we’ll see R-I-M the following week. You can join our open email distribution list which goes out several times per week for top day trader alerts, top analyst upgrades and downgrades, IPO’s, key secondary offerings, guru investor data on Buffett and others, mergers, and more.

JON C. OGG
SEPTEMBER 12, 2009

Posted in Calendar, Consumer Electronics, Consumer Goods, Earnings, Food, Retail, Technology Companies Tagged: ADBE, BBY, DFS, FDX, JAVA, KR, ORCL, PALM, PIR

Top Analyst Upgrades (AMD, AXP, ACI, ASH, STD, BRCD, COF, DFS, HIBB, MSCC, RCL, ZMH)

247wallst — Mon, 24 Aug 2009 11:58:51 +0000

There were quite a few analyst upgrades and positive research calls this Monday morning. These are the calls we have seen from Wall Street firms early this morning with about two hours until the market opens:

Advanced Micro Devices (AMD) Raised to Buy at Citigroup.
American Express (AXP) Raised to Overweight at Barclays.
Arch Coal (ACI) Raised to Overweight at JPMorgan.
Ashland (ASH) Raised to Buy at KeyBanc.
Banco Santander (STD) Raised to Overweight at JPMorgan.
Brocade (BRCD) Raised to Buy at Argus.
Capital One (COF) Raised to Overweight at Barclays.
Discover Financial (DFS) Raised to Overweight at Barclays.
Hibbett Sports (HIBB) Raised to Overweight at JPMorgan.
Microsemi (MSCC) Raised to Overweight at Thomas Weisel.
Royal Caribbean (RCL) Raised to Buy at Argus.
Zimmer Holdings (ZMH) Raised to Overweight at Thomas Weisel.

If you wish to be reminded of daily upgrades and downgrades as well as other key market issues like mergers and top stories, you can join our open email distribution list to receive updates several times per week.

JON C. OGG

Posted in Analyst Calls Tagged: ACI, AMD, ASH, AXP, BRCD, COF, DFS, HIBB, MSCC, RCL, STD, ZMH

Morgan Stanley’s Credit Analyst Lends Weight To Equity Fears (MS, DFS, RGS, KLIC, AAI)

247wallst — Tue, 07 Jul 2009 20:49:08 +0000

An appetite for risky assets that has sent small-cap and emerging market stocks and junk bonds flying since March now is getting more scrutiny from a market heavyweight. Greg Peters, head of credit strategy at Morgan Stanley, (NYSE: MS) is the latest to question the rallying assets of debt-laden companies. In an interview with Bloomberg, he calls the market incredibly dangerous, noting that average debt relative to earnings among high-yield offerings is at an 11-year high. And the strong rally is happening despite rising default rates. How long can any rally last when it’s being driven by the worst assets?

Turning to the equity market, we made a similar argument about the quality of strongly rallying assets last month, using Altman Z-scores, a measure of balance sheet health. As of last month, there were 131 stocks in the S&P 500 with Z-scores in the “distress” zone. If only one fifth of those become insolvent by mid-2011, that’s more than two dozen companies that could potentially wipe out investors. As GM and Lehman Brothers showed, no one wants to be left holding stock in a bankrupt company. The trouble is, those are the Z-scores for supposedly top companies. the Z scores are even worse among the small-cap and emerging market stocks from many of the same companies that are issuing junk bonds.

Even if Z-scores are too pessimistic in forecasting bankruptcies, the news isn’t good. Companies that pull through with weak balance sheets often have to raise funds using secondary or convertible offerings that dilute stock value for existing shareholders. In the past, many companies have announce those types of offerings after a few months of strong gains.

We’re seeing a wave of secondary offerings such as the ones so far this week from Discover Financial Services Inc. (NYSE: DFS), Regis Corp. (NYSE: RGS), Kulicke & Soffa Industries Inc. (Nasdaq: KLIC) and Air Tran Holdings Inc. (NYSE: AAI). It just so happens that every company that just posted a secondary this week has a Z score that’s in the danger zone of potentially going bankrupt, with the exception of Discover. But Discover is an exception because Z scores don’t work with financial companies.

There are times when the worlds of credit and equity move in tandem. With quality in question, this might be one of them. It’s why equity investors to heed what the credit guy is saying.

Mike Tarsala

Posted in Analyst Calls, Bonds, Secondary Offering Tagged: AAI, DFS, KLIC, MS, RGS

Top 10 Analyst Upgrades and Downgrades (AA, BBBY, BRK.A, DFS, LYG, SNY, SWI, TRW, ZBRA)

247wallst — Mon, 29 Jun 2009 11:46:33 +0000

These are the top analyst upgrades, downgrades and initiations of new coverage which we have see from Wall Street this Monday morning:

ALCOA (AA) Cut to Underperform at FBR.
Bed Bath & Beyond (BBBY) Started as Buy at Wedbush Morgan.
Berkshire Hathaway Inc. (BRK.A) Started as Outperform at KBW.
Discover Financial (DFS) Raised to Outperform at KBW.
Lloyds Banking Group plc (LYG) Raised to Conviction By List at Goldman Sachs.
Sanofi-Aventis (SNY) Cut to Neutral at JPMorgan.
SolarWinds (SWI) Started as Overweight at JPMorgan; Started as Overweight at Thomas Weisel.
TRW (TRW) Raised to Overweight at JPMorgan.
Zebra Technologies (ZBRA) Raised to Outperform at Baird.

Jon C. Ogg
June 29, 2009

Posted in Analyst Calls, Buffett Tagged: AA, BBBY, BRK-A, DFS, LYG, SNY, SWI, TRW, ZBRA

Top Analyst Upgrades & Downgrades (ADSK, AVY, CAT, DFS, FEIC, BEN, JWN, PMTC, SLB, VECO)

247wallst — Thu, 28 May 2009 11:35:33 +0000

These are some of the top pre-market analyst calls with upgrades and downgrades from Wall Street firms this Thursday morning with more than two hours until the market opens:

AutoDesk (ADSK) Started as Neutral at Janney Montgomery Scott.
Avery Dennison (AVY) Started as Underperform at Baird.
Caterpillar (CAT) Cut to Sell at UBS.
Discover Financial (DFS) Started as Outperform at FBR.
FEI Co. (FEIC) Started as Buy at Stifel Nicolaus.
Franklin Resources (BEN) Started as Outperform at Wachovia.
Nordstrom (JWN) Cut to Neutral at Credit Suisse.
Parametric Technology (PMTC) Started as Buy at Janney Montgomery Scott.
Schlumberger (SLB) Started as Neutral at HSBC.
Veeco Instruments (VECO) Started as Buy at Stifel Nicolaus.

JON C. OGG

Posted in Analyst Calls Tagged: ADSK, AVY, BEN, CAT, DFS, FEIC, JWN, PMTC, SLB, VECO

Top Analyst Upgrades (EAT, DFS, KWK, UHS, TPX, VPHM)

247wallst — Tue, 28 Apr 2009 11:54:43 +0000

These are some of the top pre-market analyst upgrades and positive research calls we have seen from Wall Street early this Tuesday morning:

Brinker International (EAT) Raised to Buy at Argus Research.
Discover Financial Services (DFS) Started as Buy at Jefferies.
Quicksilver Resources (KWK) Raised to Buy at Jefferies.
Universal Health (UHS) Raised to Buy at Deutsche Bank.
Tempur-Pedic (TPX) Raised to Buy at KeyBanc.
ViroPharma (VPHM) Started as Buy at ThinkEquity.

JON C. OGG

Posted in Analyst Calls Tagged: DFS, EAT, KWK, TPX, UHS, VPHM

Top Analyst Upgrades (BIG, COF, DFS, HPQ, JBLU, MS, MOT, TSN, USB)

247wallst — Wed, 11 Mar 2009 11:47:57 +0000

These are the top analyst upgrades and positive calls we have seen from Wall Street this Wednesday morning:

Big Lots (BIG) Raised to Overweight at JPMorgan.
Capital One (COF) Raised to Buy at Stifel Nicolaus.
Discover Financial (DFS) Raised to Buy at Stifel Nicolaus.
Hewlett-Packard (HPQ) Raised to Buy at UBS.
Jetblue (JBLU) Raised to Buy at B of A Merrill.
Morgan Stanley (MS) Raised to Buy at Goldman Sachs.
Motorola (MOT) Raised to Outperform at Oppenheimer.
Tyson Foods (TSN) Raised to Neutral from Underweight at JPMorgan.
US Bancorp (USB) Raised to Neutral from Sell at Goldman Sachs.

JON C. OGG

Posted in Analyst Calls Tagged: BIG, COF, DFS, HPQ, JBLU, MOT, MS, TSN, USB