24/7 Wall St. » FCX

When Gold, Silver, and Copper All Tank… Are They All Devil’s Metals? (GLD, RGLD, SLV, HL, JJC, SCCO, FCX)

Administrator — Tue, 08 May 2012 14:12:17 +0000

What happens when you have an appreciating dollar? Commodity prices tend to fall, all other things being equal. But what about when you have a scenario where risk-on investors are not buying these for growth and a time when defensive and inflation-wary investors are on the sidelines too? It is a perfect storm for no buyers and it means that investors are going to have to turn to the charts more than ever to see when and where the pivot levels on these are.

SPDR Gold Shares (AMEX: GLD) is down 1.6% at $156.50 and challenging the absolute lows not seen since April 4, 2012. Royal Gold, Inc. (NASDAQ: RGLD) has not held up since earnings and its shares are down almost 4% at $57.84 on the day against a 52-week range of $55.00 to $83.87. Eldorado Gold Corporation (NYSE: EGO) is performing the worst of our tracked gold names with a drop of 5.3% at $12.14, and be advised that is a new 52-week low as the prior range was $12.44 to $22.12 over the last 52-weeks.

iShares Silver Trust (AMEX: SLV), the ETF tracking the true’ Devil’s Metal of silver, is down 2.2% at $28.56. Silver Wheaton Corporation (NYSE: SLW) can always be counted on for volatility and its shares are down almost 3% at $26.65 against a 52-week range of $25.84 to $42.50. Hecla Mining Co. (NYSE: HL) remains very troubled and very challenged and shares are down again after earnings as revenue and earnings fell hard, despite it maintaining its normal dividend and announcing up to 20 million shares for a buyback plan with proceeds over the next 24 months. Hecla shares are at a new 52-week low of $3.82 against a prior 52-week range of $3.87 to $8.82.

iPath DJ-UBS Copper Total Return Sub-Index ETN (AMEX: JJC) is down with copper as the anti-growth trade seems to still be winning. Shares are down 2.1% at $47.00 against a 52-week range of $38.99 to $59.06. Southern Copper Corp. (NYSE: SCCO) is down 2.2% at $31.50. This is a drop due to the slowing growth of the emerging world on top of a slower Europe.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) remains challenged and its shares are down 2.5% at $35.48 against a 52-week range of $28.85 to $56.78.

With the S&P 500 Index down 0.6% at $1360.00, the go-to assets for risk-on and for hiding out are not working. With stocks lower it looks like investors are flocking to the safe haven of bonds for the “Sell in May and go away!” theme. The 30-Year Treasury yield of 3.03% looks to be the lowest long bond yield since February 28, 2012. The 10-Year Treasury is now yielding just under 1.85% and that appears to be the lows not seen since the start of this last February.

The stock chart from stockcharts.com below on the “GLD” should show you just how bad the gold charts are looking. If those old lows do not hold, some technicians are going to be calling for a firmer end in the gold trade while other chartists will be telling you a major bounce is coming.

JON C. OGG

Filed under: Bonds, Commodities, Currency, International Markets, Luxury, Metals Tagged: FCX, GLD, HL, JJC, RGLD, SCCO, SLV

Gold Miners in Flux (ABX, GG, NEM, KGC, AUY, FCX)

Paul Ausick — Wed, 02 May 2012 13:37:43 +0000

Gold has been trading in a fairly narrow range between $1,600-$1,700/ounce for the past two months after ending 2011 at around $1,525/ounce. Gold prices spiked to near $1,800/ounce in February, but none of this has helped gold mining stocks which are down anywhere from -20% to around -45% for the past 12 months.

Barrick Gold Corp. (NYSE: ABX), which reported quarterly results this morning, is just the latest casualty in the gold mining business. Goldcorp Inc. (NYSE: GG) missed estimates by a modest amount, and Newmont Mining Co. (NYSE: NEM) reported a modest beat for the quarter. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) beat EPS estimates by nearly 12%, the best showing of the bunch so far. Yamana Gold Inc. (NYSE: AUY) missed estimates yesterday, and Kinross Gold Corp. (NYSE: KGC) won’t report first quarter results until next week.

Demand for bullion, from central banks and investment instruments like the SPDR Gold Shares ETF (AMEX: GLD) are driving the price of gold, but not driving it to great new highs. Equity markets have been strong in the first quarter of the year, and investors have been chasing returns rather than seeking the safe haven of gold.

For the miners themselves, costs are the constraint. Barrick, for example, realized an average gold price of $1,691/ounce in the first quarter, up from $1,389/ounce in the same period a year ago, an increase of more than 21%. Cash costs rose from $437/ounce a year ago to $545/ounce in the first quarter, more than 24%. Total production costs rose from $595 to $737 per ounce, a jump of nearly 24%.

Barrick reported total cash margin on gold of $1,146/ounce, while Goldcorp reported total cash margin of $1,456/ounce. Labor and regulatory issues contribute to higher costs, as do less productive ores. Then there are the rising costs of new exploration and development.

If investors continue to flock to equity markets, only central banks and jewelry makers are left to push demand for gold. That’s not a good position for the miners to be in.

Barrick’s announced a 33% increase in its quarterly dividend this morning, to $0.20/share. Goldcorp raised its quarterly dividend to $0.35/share earlier. Neither move will boost the dividend yield above 2% though — and even if it did, it probably wouldn’t be enough to lift the share prices much.

Barrick stock is down about -1.6% in the pre-market, at $39.80 in a 52-week range of $38.46-$55.95.

Paul Ausick

Filed under: Commodities, Earnings Tagged: ABX, AUY, FCX, GG, KGC, NEM

Copper Miners Looking at a Tough Year (FCX, RIO, SCCO, BHP)

Paul Ausick — Thu, 19 Apr 2012 13:54:00 +0000

From a high of around $4.60/pound in February of 2011, copper prices have fallen around $3.60/pound today, which is actually better than the price of around $3.40/pound at the beginning of the year. Copper miners Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Rio Tinto plc (NYSE: RIO), Southern Copper Corp. (NYSE: SCCO), and BHP Billiton plc (NYSE: BHP) have all seen production declines recently, some on purpose and some due to other factors.

Freeport-McMoRan reported first quarter earnings this morning, and revenues are down nearly -20% from the same period a year ago, $4.6 billion this year versus $5.7 billion a year ago. Copper production is down from 950 million pounds a year ago to 833 million pounds this year and unit net costs have risen from $0.79 to $1.26.

In the earnings report, the CEO said that the company plans to increase copper production by 25% in the next 3 or 4 years, and he noted Freeport’s longer-term prospects:

We are highly positive about the long-term prospects of our business and markets. Our company is well-positioned with long-lived reserves and mineral resources, an attractive mid-term and longer-term organic growth profile and a strong financial position.

EPS for the quarter came in at $0.80, versus a consensus estimate of $0.86 and year-ago EPS of $1.57. Gold production was down by -46% although the average realized price per ounce was 21% higher.

Labor problems in Indonesia get some of the blame for the production declines and for higher unit costs. But the company did face higher labor costs in the Americas, and that will likely turn out to be a drag for some time to come.

Southern Copper’s unit costs in 2011 were just $0.41/pound and the company has said nothing yet about first quarter production, nor has it announced a date on which it plans to report earnings. The consensus estimate for EPS is $0.59 on revenue of $1.6 billion. That’s above last year’s actual EPS of $0.55, and is very likely wishful thinking. Southern Copper gets nearly 77% of total sales from copper.

Rio Tinto published its operational review earlier this week, noting that copper production at its Kennecott mine is down -18%, due to the lower grade ores being mined. The company expects the low-grade ores to persist through the first half of the year, but is planning to mine a higher grade area later in the year. The company also plans to shut down its smelter for 26 days in order to switch to equipment to handle the higher grade ores. The company did not say anything about costs or sales in its operations review.

BHP Billiton released an operational review yesterday, showing copper production down -10% for the first nine months of its 2012 fiscal year compared to the first nine months of 2011. The March quarter showed a boost of 3% compared with the same period a year ago, and sequential production was flat. Copper is less important to BHP, which is the world’s largest iron ore miner, but the company is expanding its copper production.

A recovery in copper prices depends almost entirely on demand from China, which takes about 40% of the world’s copper and is currently constrained by near-record inventories of around 3 million metric tons.

Warehouses at the London Metals Exchange, conversely, are more than half empty, which gives some hope for price rises. The bad news, though, is that prices for copper deliveries are higher for immediate delivery than they are for July delivery, a commodities market condition known as ‘backwardation’. Usually this market supports higher prices, but this time a lot depends on how fast and by how much China uses its stockpiles.

Freeport shares are up about 2% at $39.05 in a 52-week range of $28.85-$56.78.

Paul Ausick

Filed under: China, Commodities, Earnings, International Markets, Metals Tagged: BHP, FCX, RIO, SCCO

Upside is Scarce in Metals and Materials Stocks (X, NUE, STLD, NEM, ABX, SLW, FCX, SCCO, AA, MCP)

Paul Ausick — Thu, 23 Feb 2012 16:50:29 +0000

The metals and materials sector, including miners, has been hit hard by the weaker global economy. China’s manufacturing slowdown, the turmoil in Europe, and slow growth in the US have caused prices to fall even as expenses rise. All but three of the companies in this survey have had their target prices lowered in the past three months, a further signal that weaker revenues and profits may be in store for 2012.

The companies we examined were United States Steel Corp. (NYSE: X), Nucor Corp. (NYSE: NUE), Steel Dynamics Inc. (NASDAQ: STLD), Newmont Mining Corp. (NYSE: NEM), Barrick Gold Corp. (NYSE: ABX), Silver Wheaton Corp. (NYSE: SLW), Freeport-McMoran Copper & Gold Inc. (NYSE: FCX), Southern Copper Corp. (NYSE: SCCO), Alcoa Inc. (NYSE: AA), and Molycorp, Inc. (NYSE: MCP).

Since November, gold prices have gained about 3%. Silver prices are essentially flat, and copper prices are up by about 5%. Titanium prices are about 6% lower, steel prices have been falling and are now about 7% lower than in November, and rare earth minerals exports from China were below expected levels in 2011, causing a price drop in the latter part of the year. Chinese production projections for 2012 are roughly equal to the 2011 production quota of 31,000 metric tons.

Newmont’s consensus target price has fallen from $81 in November to $77.92. At a current price this morning of $62.98, Newmont’s implied gain is 23.7%. Since the beginning of the year, the stock has gained more than 5%, with a 12-month share price gain of about 6.8%. The company raised its quarterly dividend to $0.35, a jump of 133%, following a pledge to raise dividends if gold price targets were met. The company’s dividend yield is now 2.3%.

Barrick’s target price has also been cut, from $68 to $64.72. At its current price of $49.62, Barrick’s implied gain is 30.4%. Year-to-date shares are up about 9.6%, but for the preceding 12 months, Barrick’s stock is down 5.6%. Shares are trading at less than 6% away from the 52-week high of $55.95. Over the past month, Barrick’s shares have gained 12%.

Molycorp’s target price fell from $70 to $52.83. At a current price of $28.68, the potential upside is a whopping 84%. Molycorp’s shares have lost about 38% in the past 12 months, though since January shares have risen about 20%. The company is expected to report EPS of $0.41 on revenue of about $135 million after markets close today. The company has begun a phased launch of its new manufacturing facility and expects to produce 19,050 metric tons of oxides by the end of the third quarter. That would be good news if prices weren’t falling.

US Steel’s target price remained nearly flat from November’s $34.50 to today’s $35.21. At the current price of $28.19, the implied gain is 24.9%. Falling steel prices in the fourth quarter hurt all steel makers. Global crude steel production grew 6.8% in 2011, which combined with a slower growing economy depressed prices. Global production was down -7.8% year-over-year in January, which could herald a comeback in pricing.

Nucor’s target price has risen from about $45 to $48 since November. At the current share price of $43.44, the potential upside is 10%. Two recent analyst downgrades have chopped share price gains, but Nucor’s stock is still up nearly 10% since January.

Freeport-McMoran’s target price actually rose from$53 to $55.28 in the last three months. At the current share price of $43.89, the potential upside for the stock is 26%. Freeport had a lousy fourth quarter, due mainly to labor strife in Australia. Slowly rising copper prices should help, but production may have to be reined in to keep prices moving up.

Silver Wheaton’s consensus target price fell from $49.50 to $47.80, while the share price has gained more than 26% in three months. At the current share price of $39.29, the implied gain here is 21.7%. Silver prices are roughly flat since November, and unless they improve, Silver Wheaton’s share price won’t either.

Alcoa’s target price has dropped from $13 to $11.53 since November. At the current price of $10.46, the implied gain in Alcoa stock is about 10%. Alcoa appears to have little attraction at its current share price, which is more likely to suffer than prosper from a glut of aluminum.

The target price for Steel Dynamics has risen from $16 to $18 in the past three months. At the current price of $14.75, the implied gain in the stock is 22%. As with US Steel, whether or not Steel Dynamics has a chance to add value depends on demand for steel and what that will do to prices if production continues to grow.

Southern Copper’s target price hjas fallen from $36.25 to $35.58. At the current price of $33.45, the implied gain for Southern Copper is 6.4%. The only thing that will boost Southern is a rise in copper prices.

The underlying softness in commodity prices makes any play other than gold a risky choice. Newmont and Barrick, the two gold producers in this bunch, offer significant upside potential, and rising gold prices should help, provided the miners can keep costs under control.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Commodities, Metals Tagged: AA, ABX, FCX, MCP, NEM, NUE, SCCO, SLW, STLD, X

24/7 Wall St. Closing Bell (V, MA, C, CVX, APD, EBAY, ZZ, BLK, BAC, FCS, FCX, MS, LUV, EGHT, TSL, JASO, STP)

Paul Ausick — Thu, 19 Jan 2012 21:04:43 +0000

Stocks opened higher this morning and have mostly remained in positive territory throughout the day. Reports that China was considering lowering its banks’ capital reserve requirements boosted both Asian and European markets this morning, while early morning earnings reports put more air under the opening. Morning reports from the federal government on natural gas, crude oil, and refined products inventories weighed on both commodity prices and energy stocks. Crude is mixed today, with WTI down -0.28% at $100.31/barrel and Brent up 0.7% at $111.44. Gold fell about -0.45% today to $1,652.50.

The unofficial closing bells put the DJIA up about 46 points to 12,625.19 (0.37%), the NASDAQ rose more than 18 points (0.67%) to 2,788.33, and the S&P 500 rose 0.5% or more than 6 points to 1,314.52.

There were several analyst upgrades and downgrades today, including Visa Inc. (NYSE: V) started as ‘outperform’ at Credit Suisse; Mastercard Inc. (NYSE: MA) started as ‘outperform’ at Credit Suisse; Citigroup Inc. (NYSE: C) maintained ‘sell’ at Argus; Chevron Corp. (NYSE: CVX) maintained as ‘buy’ with target price of $130 but lowered estimates at Argus; and Air Products and Chemicals Inc. (NYSE: APD) cut to ‘neutral’ at JPMorgan.

Earnings reports since markets closed yesterday have led to some price changes as of the last half hour of trading today: Ebay Inc. (NASDAQ: EBAY) is up nearly 4% at $31.55; Sealy Corp. Inc. (NYSE: ZZ) is down nearly -18% at $1.51; Blackrock Inc. (NYSE: BLK) is down -0.75% at $186.39; Bank of America Corp. (NYSE: BAC) is up 2.65% at $6.98; Fairchild Semiconductor International Inc. (NYSE: FCS) is down -3.51% at $14.02; Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) is down -0.22% at $44.37; Morgan Stanley (NYSE: MS) is up 5.42% at $18.29; and Southwest Airlines Co. (NYSE: LUV) is up 3.33% at $9.32.

Other standouts from today include the following stocks:

8×8 Inc. (NASDAQ: EGHT) is up more than 26% at $4.30. The telecom services company reported much better-than-expected earnings for its third fiscal quarter.

Trina Solar Ltd. (NYSE: TSL) is down more than -15% at $8.32. The solar panel maker is falling following Germany’s announcement that it will begin lowering its solar subsidies.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is down nearly -15% at $$1.80. This Chinese solar panel maker is suffering from the German subsidy cut as well.

Suntech Power Holdings Co. Ltd. (NYSE: STP) is down -14% at $3.18. Another Chinese solar maker hit by the cuts to German subsidies. The list could go on, but you get the idea.

Stay tuned for Friday. We have noted the following event on the schedule (all times Eastern):

10:00 a.m. – Existing home sales

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: APD, BAC, BLK, C, CVX, EBAY, EGHT, FCS, FCX, JASO, LUV, MA, MS, STP, TSL, V, ZZ

Best Ideas For 2012: Mostly Dividends & Value (BRK-A, CMCSA, FCX, MET, PG, STX, RDS.A, VOD, SNY, AAPL, GOOG, IBM)

Administrator — Tue, 13 Dec 2011 17:59:17 +0000

This last weekend brought the first waves of picks for 2012. Barron’s issued its “10 Favorite Stocks For 2012″ and the stocks were just about all lower on Monday with a very weak stock market. The common investment themes for a 2012 list were healthy dividends and low price/earnings ratios.

Barron’s listed Berkshire Hathaway Inc. (NYSE: BRK-A), Comcast Corporation (NASDAQ: CMCSA), Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Metlife, Inc. (NYSE: MET), and Procter & Gamble (NYSE: PG). The list also includes some ADRs via Seagate Technology PLC (NASDAQ: STX), Royal Dutch Shell (NYSE: RDS.A), Vodafone Group PLC (NYSE: VOD), Sanofi (NYSE: SNY), and Daimler (DDAIF).

The aim was companies with low P/E ratios, somewhat high dividends, and companies with an expected upside of potentially 15% to 20%. This won’t excite many investors. Apple Inc. (NASDAQ: AAPL) was not in the list nor was Google Inc. (NASDAQ: GOOG). Neither pays a dividend, but both have relatively low P/E ratios considering the recent growth (14 for Apple and about 17 for Google). If you use the Thomson Reuters consensus analyst price target, Apple has 29% upside and Google has 16% upside.

Berkshire Hathaway Inc. (NYSE: BRK-A) is interesting now that it has added International Business Machines Corporation (NYSE: IBM) and Intel Corporation (NASDAQ: INTC) to its portfolio. IBM yields a low 1.5% today and is buying back stock despite trading at all-times highs. The company’s goal is $20.00 in earnings per share by 2015. Intel just warned about a large revenue shortfall but its dividend yield is now about 3.5%.

Comcast Corporation (NYSE: CMCSA) is actually still interesting because of its growth and value and because it is changing its mix to include content. The 2% yield is one which has room for further dividend growth and the cable giant’s share price actually offers almost 30% to the Thomson Reuters consensus price target.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) and Seagate Technology PLC (NASDAQ: STX) are both very opportunistic calls. Hard disk drive troubles around the globe, a prior discount to highs, and a dividend north of 4% helped Seagate. Freeport-McMorRan is an opportunistic call now that global growth has brought down shares of metals companies drastically. It has a 2.5% yield, which is not bad for a metals company, and at $39.00 the Thomson Reuters consensus price target is actually 30% higher than the current share price.

Perhaps the ADRs and European plays of Daimler (DDAIF), Royal Dutch Shell (NYSE: RDS.A), Sanofi (NYSE: SNY) and Vodafone Group PLC (NYSE: VOD) are opportunistic around the weakness of Europe today. After all, if the Euro Zone continues its downward trajectory and with the Euro currency at an 11-month low it would seem that the article could blame a worsening effect if these positions do not work out.

24/7 Wall St. has recently announced a couple of key lists with predictions and expected upside. Our DJIA Stocks Soon To Raise Dividends has already seen some come to fruition even sooner than expected, and we have released to our free email subscribers the 24/7 Wall St. 2012 Model Dividend Portfolio.

If you want to receive the full 24/7 Wall St. 2012 Model Dividend Portfolio you can sign up in the email submission below. Each morning we send our free email list subscribers a snapshot of the key feature stories, the top daily analyst upgrades and downgrades, previews for key events, and many other aspects governing your finances.

Barron’s noted a 6.9% drop so far in 2011 for its Favorite Stocks for 2011 versus a 1.9% drop in the S&P 500 Index.

JON C. OGG

Filed under: Analyst Calls, Defensive Stocks, Dividend, Editor's Picks, Value Investing Tagged: AAPL, BRK-A, CMCSA, FCX, GOOG, IBM, MET, PG, RDS-A, SNY, STX, VOD

Another Look at Expected Gains in Metals and Materials Stocks (X, NUE, STLD, NEM, ABX, SLW, FCX, SCCO, TIE, AA, MCP)

Paul Ausick — Fri, 11 Nov 2011 20:01:34 +0000

In mid-October, we took a look at target prices and implied gains among 11 metals and materials stocks. The companies we examined were United States Steel Corp. (NYSE: X), Nucor Corp. (NYSE: NUE), Steel Dynamics Inc. (NASDAQ: STLD), Newmont Mining Corp. (NYSE: NEM), Barrick Gold Corp. (NYSE: ABX), Silver Wheaton Corp. (NYSE: SLW), Freeport-McMoran Copper & Gold Inc. (NYSE: FCX), Southern Copper Corp. (NYSE: SCCO), Titanium Metals Corp. (NYSE: TIE), Alcoa Inc. (NYSE: AA), and Molycorp, Inc. (NYSE: MCP).

Gold prices have gained about $60/ounce, about 3.6%. Silver prices are up roughly 9%. Copper prices are up by about 8.6%. Titanium prices are unchanged, steel prices have been drifting though more varieties appear to be selling at lower prices, and rare earth minerals vary widely depending on the particular mineral. Lanthanum oxides are selling for about $61/kilogram, while terbium oxide goes for $605/kilogram.

All stock data comes from Yahoo! Finance and current prices were gathered in the early afternoon today.

Of the companies we survey, all but one enjoys a higher stock price today than they did last month. The single exception is Molycorp, which is getting punished today for missing both EPS and revenue estimates. At yesterday’s closing price of $38.70, Molycorp’s share price was higher than it was a month ago.

More interesting, perhaps, were recent changes in median price targets. Only Nucor and Titanium’s price targets have remained the same in the last month. Two stocks, Newmont and Barrick, had their price targets raised and the other seven had price targets lowered.

Newmont’s target price was raised from $77 to $81. At the new target price and a current price of $70.41, Newmont’s implied gain is $10.59, or 15%. The stock put up a new 52-week high last week, and its forward P/E also rose from 10.2 to 11.47. In the past month, shares have gained more than $7, or 11%. The company’s pledge to raise dividends if gold price targets are met is another reason to look carefully at this stock.

Barrick’s target price was raised from $66.50 to $68. At the new target price and a current price of $52.61, Barrick’s implied gain is $15.39, or 29%. Shares are trading at less than 6% away from the 52-week high of $55.95. Over the past month, Barrick’s shares have gained 12%.

The largest drop in target price was settled on Molycorp, which saw its target price fall from $80- to $70. Even at that, the implied gain for the shares, based on today’s price of $34.04, is 106%. The wide gap is due not so much to any failure on Molycorp’s part but to what might be “irrational exuberance” for the stock by investors. There is also the fact that Molycorp’s mineral reserves tend to be heavy on the lower-priced rare earths and light on the higher-priced metals.

The largest percentage drop in target price was claimed by US Steel, which saw its target price fall from $40 to $34.50, nearly 14%. The company posted a new 52-week low on October 3rd. At the current price of $26.08, the implied gain is $8.42, or 32%. US Steel is widely expected to be acquired — and fairly soon — which is attracting short sellers in droves.

Freeport-McMoran’s target price fell from $55 to $53 in the past month, even though shares have added $5.05, or about 15%, in the same period. The implied gain based on the new target price and the current price of $39.83 is 33%. Freeport’s problem is that demand for copper might be stagnating or worse, given the construction slowdown in China.

Silver Wheaton’s target price fell from $51.50 to $49.50, while the share price has gained 17%. At the new target price and based on today’s price of $36.18, the implied gain here is 37%. There is plenty of headroom for Silver Wheaton’s share price to continue rising, but demand for silver will be the driver.

Alcoa’s target price dropped from $15.50 to $13 in the last month, even as the share price has risen by about 8%. At the new target price and based on the current price of $10.58, the implied gain in Alcoa stock is nearly 23%. Given that shares rose by 8% in the last month, anything’s possible, even that Alcoa may hit the lower target.

The target price for Steel Dynamics fell from $18 to $16, while share prices gained a substantial 23% in the same period. At the new target price and a current price of $13.51, the implied gain in the stock is 18%. EPS estimates for the current quarter have fallen by nearly -20% in the past month, following lowered guidance from the company.

Southern Copper’s target price fell from from $36.75 to $36.25 in the past month, even though the share price rose by 21%. At the new target and at the current price of $32.41, the implied gain for Southern Copper is nearly 12%.

Paul Ausick

Filed under: Commodities, Metals Tagged: AA, ABX, FCX, MCP, NEM, NUE, SCCO, SLW, STLD, TIE, X

24/7 Wall St. Closing Bell (FCX, CECO, CLX, COL, BSX, MDT, FICO, LAMR, OWW, KSWS, RIG, MDVN, SNSTA, SONO, DNDN, ANF, CLWR)

Paul Ausick — Thu, 03 Nov 2011 20:05:46 +0000

Stock markets. Equity markets opened sharply higher this morning before falling into negative territory before the ISM and factory order reports were released. The ISM index came in lower than expected, but factory orders grew by 0.3%, slightly better than expected. New pressure on Greece to forgo its referendum on the EU bailout package helped push share prices up, as did strength in tech stocks. Crude oil is up nearly 1.5% and gold is up nearly 2%, while the dollar is down against both the euro and the British pound.

Closing bell. The unofficial closing bells put the DJIA up more than 207 points to 12,043.19 (1.75%), the NASDAQ rose nearly 58 points (2.2%) to 2,697.97, and the S&P 500 rose 1.87% or more than 23 points to 1,261.10.

Analyst upgrades and downgrades. There were several analyst upgrades and downgrades today, including Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) started at ‘overweight’ at Barclays. Career Education Corp. (NASDAQ: CECO), Clorox Corp. (NYSE: CLX), and Rockwell Collins Inc. (NYSE: COL) were cut to ‘underperform’ at BofA/Merrill Lynch; and Boston Scientific Corp. (NYSE: BSX) and Medtronic Inc. (NYSE: MDT) were started as ‘outperform’ at Credit Suisse.

Market reacts to earnings. Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Fair Isaac Corp. (NYSE: FICO) is up about 25%, at $33.95; Lamar Advertising Co. (NASDAQ: LAMR) is up nearly 25%, at $26.18; Orbitz Worldwide, Inc. (NYSE: OWW) is up 40%, at $2.66; K-Swiss Inc. (NASDAQ: KSWS) is down more than -33%, at $3.09; and Transocean Ltd. (NYSE: RIG) is down about -13%, at $48.73.

Several other standouts from today are as follows…

Medivation Inc. (NASDAQ: MDVN) is up 140%, at $39.74 after posting a new 52-week high of $40.15 earlier today. The company reported that an experimental prostate cancer drug reduced death risk by 37%.

Sonesta International Hotels Corp. (NASDAQ: SNSTA) is up nearly 41%, at $30.65 after posting a new 52-week high of $31.06. The company has agreed to be acquired for $31/share by an affiliate of Hospitality Properties Trust (NYSE: HPT).

SonoSite, Inc. (NASDAQ: SONO) is up about 29%, at 39.62 after posting a new 52-week high of $40 earlier today. Sonosite is reported to have hired Morgan Stanley to find a buyer for the company and talks are already in progress with potential buyers, including Samsung Electronics.

Dendreon Corp. (NASDAQ: DNDN) is down more than -37%, at $6.53 after setting a new 52-week low of $6.52 earlier today. The company today reiterated its forecast for only modest sales of its Provenge anti-cancer drug.

Abercrombie & Fitch Co. (NYSE: ANF) is down nearly -20%, at $59.51. The company reported slowing sales in Europe, a region where the company had pinned its hopes for growth.

Clearwire Corp. (NASDAQ: CLWR) is down about -14%, at $1.75. The company is seeking additional financing and has been unable to get its largest customer and majority shareholder Sprint Nextel Corp. (NYSE: S) to commit to the financing.

Stay tuned for Friday. The G-20 summit opened today and will continue meeting tomorrow and over the weekend. Monster Worldwide Inc. (NYSE: MWW) releases its October report on US online job demand. We have noted the following event (all times Eastern):

8:30 a.m. – Non-farm payroll data for October

Paul Ausick

Filed under: Market Close Tagged: ANF, BSX, CECO, CLWR, CLX, COL, DNDN, FCX, FICO, KSWS, LAMR, MDT, MDVN, OWW, RIG, SNSTA, SONO

Top Analyst Upgrades & Downgrades (NLY, BSX, CECO, CLX, CNH, DNDN, FCX, HXL, HSP, MDT, COL, SWIR, STJ, SLF, TEVA, TDW, WYN)

Administrator — Thu, 03 Nov 2011 12:34:47 +0000

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

Annaly Capital Management, Inc. (NYSE: NLY) Raised to Outperform at Wells Fargo.
Boston Scientific Corp. (NYSE: BSX) Started as Outperform at Credit Suisse.
Career Education Corp. (NASDAQ: CECO) Cut to Underperform at BofA/ML.
Clorox Corp. (NYSE: CLX) Cut to Underperform at BofA/ML.
CNH Global N.V. (NYSE: CNH) named as Value stock of the day at Zacks.
Dendreon Corporation (NASDAQ: DNDN) Cut to Neutral at Goldman Sachs.
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) Started as Overweight at Barclays.
Hexcel Corporation (NYSE: HXL) Cut to Neutral at BofA/ML.
Hospira Inc. (NYSE: HSP) cut to Underperform ar Bear of the Day at Zacks.
Medtronic Inc. (NYSE: MDT) Started as Outperform at Credit Suisse.
Rockwell Collins Inc. (NYSE: COL) Cut to Underperform at BofA/ML.
Sierra Wireless Inc. (NASDAQ: SWIR) downgraded at Raymond James and Morgan Keegan.
St. Jude Medical (NYSE: STJ) Started as Neutral at Credit Suisse.
Sun Life Financial Inc. (NYSE: SLF) Cut to Underperform at Credit Suisse.
Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) Raised to Overweight at Morgan Stanley.
Tidewater Inc. (NYSE: TDW) Cut to Hold at Argus.
Wyndam Worldwide (NYSE: WYN) named Bull of the Day at Zacks.

JON C. OGG

Filed under: Analyst Calls Tagged: BSX, CECO, CLX, CNH, COL, DNDN, FCX, HSP, HXL, MDT, NLY, SLF, STJ, SWIR, TDW, TEVA, WYN

Mining Stocks Undervalued According to BlackRock (BLK, BHP, RIO, VALE, FCX, SCCO)

Paul Ausick — Tue, 25 Oct 2011 15:47:27 +0000

Investors appear to have lost faith in mining stocks, sending share prices down steadily throughout the year. Both iron ore and copper prices are down nearly 20% since the beginning of the month, and there could be more weakness in store. But one of the world’s largest resource investors, BlackRock (NYSE: BLK), believes that raw materials are getting a raw deal. Maybe so, but there are reasons for that raw deal. BlackRock’s take on the sell-off of mining stocks is that investors are simply following the equities market in general and not paying enough attention to the fundamentals. Worse, fears about European banks, a weak global economy and a slowdown in China are adding to pressure on the miners. BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RIO) are both stating that their order books are full and that demand for iron ore and copper, in particular, remains strong. BHP does admit that prices are softening as customers adopt a wait-and-see approach to purchases.What that means is that quarterly contract prices could be in jeopardy as customers choose to take their chances on the spot market, where price erosion shows up most quickly. Vale (NYSE: VALE), Freeport-McMoran Copper & Gold (NYSE: FCX) and Southern Copper (NYSE: SCCO) could also be feeling the effects of customer wariness.

Iron ore purchases have seriously begun migrating to the spot market, which is particularly hard on small miners, though less of a problem for BHP, Rio Tinto and Vale. These giant miners can take a longer view of market conditions, and all are spending to expand production to meet growing demand. And demand remains strong to some extent because spot prices are, in many cases, lower than contract prices.

If customer demand continues to be strong, and the iron ore miners are unable to negotiate advantageous quarterly contracts as spot prices decline, then expanded production hardly seems the answer. That is especially the case if production costs continue to rise.

The situation in copper production is similar. China, which is the world’s largest consumer of copper, has been slowing down its copper refining industry and pulling materials from inventory rather than buying more. At some point, the refiners will have to restock, but that day could be some time off. Volatile copper prices are, so far at least, keeping Chinese buyers from making large purchases.

Copper prices have risen from near $3 per pound at the beginning of the month to around $3.40 per pound today, though still well below late July prices of around $4.40 per pound. But unlike the case with iron ore, demand is not as strong and a strike at Freeport’s Peruvian and Indonesian mines is lowering production goals. BHP has delayed some deliveries originally scheduled for the second half of 2011 to next year as it recovers from strike at its Chilean copper mine.

BlackRock’s claim that the big miners are undervalued appears to have merit based on the current state of the market and on expected demand from China. The real question might be one of timing. Iron ore and copper prices are currently low and may still be searching for a bottom. When that bottom is reached is anybody’s guess, but there is little reason to believe that it will happen very soon.

Demand for iron ore and copper remains strong in India and Brazil, while demand from developed countries is steady at best. Without a demand spike from China, though, India and Brazil together will not push prices significantly higher. Increased production and lower customer acceptance of quarterly contract pricing could continue to weaken, if not erode, prices further.

All these mining company stocks posted a new 52-week low earlier this month, although all have begun to climb back. For the past 12 months, BHP is down the least, at 6.5% and Southern Copper is down the most, at 31%. And today, when the DJIA is down about 1.2%, all these miners, except Southern, are down nearly twice as much. BlackRock has not made many converts today.

Paul Ausick

Filed under: China, Commodities, Metals Tagged: BHP, BLK, FCX, RIO, SCCO, VALE