24/7 Wall St. » RACK

6 Big Losers on a Strong Day (HAYZ, HSII, PEP, KO, RACK, RBS)

247wallst — Tue, 14 Oct 2008 08:58:49 +0000

Traders and investors alike love to look for stocks that are going to run up with a strong market. Yesterday was a record DJIA point move and today we have at least buying strength at the open. But when traders see stocks that are weak in strong markets, they generally either stay away from those companies or they put on bets against them for days as the bad news is out. Imagine how they’d do if the market was down. Below is our list of big losers on a strong day.

Hayes Lemmerz International Inc. (NASDAQ: HAYZ) is down over 25% at$1.80 in early trading. This maker of fabricated steel and castaluminum wheels for cars may just be giving back half of its gains fromyesterday. Its 52-week trading range is $1.28 to $5.02.

Heidrick & Struggles International Inc. (NASDAQ: HSII) is hidingand struggling after lowering net revenue to approximately $630million, down from prior guidance of $650 to $660 million and comparedto consensus of about $627 million. The executive search firm alsosees operating margin of approximately 10% compared to prior guidanceof 13%. Shares are down almost 5% at $24.53 and its 52-week tradingrange is $22.58 to $45.57.

Pepsico, Inc. (NYSE: PEP) posted earnings at $0.99 EPS net and $1.06core earnings vs. $1.08 estimates and put 2008 earnings at $3.67 to$3.68 on a core basis compared to estimates of $3.74. The company alsoannounced that it would shed 3,300 jobs under its new productivity planand would take $550 to $600 million in pre-tax charges. A staple likesoft drinks, bottled water, and chips laying off 3,300 workers is notexactly the norm. This one if off almost 9% at $56.30, and its 52-weektrading range is $53.21 to $79.79.

Coca-Cola Co. (NYSE: KO) is feeling a sharp sting today too. It seemsthat the woes of Pepsi are creating an "earnings taste test challenge"for Coke.

Rackable Systems (NASDAQ: RACK) is getting racked after the server andstorage company issued an earnings warning. It now sees a loss for theyear now, which was not expected by Wall Street even if the street waswilling to accept lower numbers. Shares down 8% at $7.99 right afterthe open and its prior 52-week trading range before a $7.15 printtoday) was $7.47 to $14.51.

Royal Bank of Scotland Group Plc (NYSE: RBS) is now down over 30%. Itis barely a $1.25 stock, but this is a surprise considering the bailoutpackages that are being thrown in the US, the UK, and the EU. It lookslike these guys are choking just like the character on the commercial.

Jon C. Ogg
October 14, 2008

Posted in HI/LOW Tagged: HAYZ, HSII, KO, PEP, RACK, RBS

Top Pre-Market Analyst Downgrades (BBY, BBBY, CC, DELL, HPQ, JNS, LIZ, LSI, PIR, RACK, RSH, SFD)

247wallst — Tue, 05 Aug 2008 06:25:06 +0000

These are some of the top Downgrades or negative calls we are seeing early this Tuesday morning. Neutral and Hold ratings are not technically negative, but they aren’t ringing endorsements either.

Best Buy (BBY) Started as Hold at KeyBanc.
Bed Bath & Beyond (BBBY) Started as Hold at KeyBanc.

Circuit City (CC) Started as Underweight at KeyBanc.
Dell (DELL) Started as Neutral at UBS.
Hewlett-Packard (HPQ) Started as Neutral at UBS.
Janus Capital (JNS) Cut to Underweight at JPMorgan.
Liz Claiborne (LIZ) Cut To Neutral at Credit Suisse.
LSI Corp. (LSI) Cut to Underweight at Lehman.
Pier 1 Imports (PIR) Started as Underweight at KeyBanc.
Rackable Systems (RACK) Cut to Neutral at Merriman Curhan Ford.
Radio Shack (RSH) Started as Hold at KeyBanc.
Smithfield Foods (SFD) Started as Neutral at JPMorgan.

Jon C. Ogg
August 5, 2008

Pre-Market Analyst Calls (July 10, 2007)

247wallst — Tue, 10 Jul 2007 06:41:03 +0000

ACAD started as Outperform at FBR.
ALC started as Outperform at RBC.
ARUN started as Buy at Jefferies.
ATVI started as Buy at First Albany.
AZ raised to Buy at UBS.
CHA cut to Hold at Deutsche Bank.
DRIV raised to Outperform at RBC.
DTV raised to Buy at Citigroup.
EMC started as Mkt Perform at BMO Capital Markets.
F raised to Overweight at JPMorgan.
FOLD started as Overweight at JPMorgan.
FORM cut to Underweight at JPMorgan.
FVE started as Sector Perform at RBC.
GGG cut to Sector Perform at CIBC.
GM raised to Overweight at JPMorgan.
GME started as Buy at First Albany.
GRMN started as Neutral at B of A.
LMIA cut to Mkt Perform at Wachovia.
MU raised to Buy at Jefferies.
PLCM started as Buy at Jefferies.
PNM raised to Hold at Citigroup.
QLGC started as Outperform at BMO Capital Markets.
RACK cut to Sector Perform at RBC.
SMG raised to Overweight at JPMorgan.
UNCA cut to Hold at Jefferies.
VOLV raised to Overweight at HSBC.

Jon C. Ogg
July 10, 2007

Earlybird Analyst Calls (June 14, 2007)

247wallst — Thu, 14 Jun 2007 06:29:07 +0000

ACL started as Buy at Jefferies.
AMGN started as Mkt Perform at Rodman & Renshaw.
B started as Outperform at CIBC.
CBB started as Buy at UBS.
CHE started as Buy at Jefferies.
CTL raised to Neutral at UBS.
CYTX started as Mkt Perform at Piper Jaffray.
DJ cut to Reduce at UBS.
EQ raised to Buy at UBS.
ESI cut to Equal Weight at Lehman.
EYE started as Underperform at Jefferies.
GNLB started as Buy at Oppenheimer.
ILMN raised to Outperform at Bear Stearns.
ISIL raised to Buy at B of A.
MFA started as Outperform at JMP Securities.
MNKD started as Buy at B of A.
OPTT started as Outperform at Bear Stearns.
PT raised to Outperform at Credit Suisse.
RACK started as Buy at Merriman Curhan Ford.
RBC started as Sector Perform at CIBC.
SLM cut to Peer Perform at Bear Stearns.
SNY cut to Neutral at HSBC; cut to Neutral at JPMorgan.
THI raised to Outperform at CIBC.
VDSI cut to Hold at Jefferies.
VTIV raised to Strong Buy at First Albany.
WIN started as Neutral at UBS.
ZGEN started as Neutral at Oppenheimer.

Jon C. Ogg
June 14, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

If Rackable Got a Bid, Could It Get Shareholder Approval? (RACK)

247wallst — Tue, 05 Jun 2007 10:15:08 +0000

Shares of Rackable Systems (RACK) are trading up nearly 8% today as at least two different online options tracking services have reported that increased call option activity may be an indicator of an acquisition offer coming or of further shareholder-friendly devleopments. Rackable fell more than 80% from its highs in the recent year and reached a new $11.25 low last month.

This is the epitome of a high-flyer that experienced a flameout, and the company isn’t even consistently profitable at the current time. So the stock is up to $13.78, and that is close to a 25% gain off the lows. There is a serious problem that ‘buyout speculators’ need to consider: a buyout offer doesn’t mean the deal would be accepted by the vast number of shareholders who are long and wrong. There are so many shareholders who are long and wrong that would be crushed if a buyout came anywhere close to current prices. That might put in a perceived floor to the stock, but it is just very hard to tell how high a bid would have to come before the company could get enough "YES" votes from all of the existing shareholders. Maybe it’s as low as $15.00, maybe $20.00, maybe much higher…..

There were so many buyers each time this one took a whacking and it experienced enough gap drops from earnings warnings that bottom fishing in Rackable shares became bottom sniffing. Maybe the sniffers this last round have come out well enough so far that they got to be true bottom fishers. But thinking that a buyout could be approved at anywhere near current prices is a risk that is easy for most investors to not consider.

Rackable is a good company for a buyer that can smooth out the quarterly numbers without the demands and it could be a good holding for a larger company. It just boils down to how much it would really take to buy it to keep shareholders from revolting more than just from the drop already seen. The company’s market cap has sunk to $393 million at current levels. It had more than $170 million in cash and equivalents and almost $75 million in total liabilities. It’s cheap at current levels and we all know there is a reason it’s cheap.

Jon C. Ogg
June 5, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he owns.

Coming to Rackable Systems’ Defense (RACK)

247wallst — Wed, 09 May 2007 07:46:49 +0000

Rackable Systems (RACK-NASDAQ) is a stock that probably doesn’t need reminding about a weak stock, and calling it weak may be far too kind.

Just yesterday the company settled some patent litigation with Super Micro Computer. This morning the shares are trading higher after First Albany came out on valuations and raised the shares all the way up to a Buy rating from an Underperform rating. This upgrade looks like it is the only active buy rating from brokerage firms that follow the stock. It also appears that First Albany was not in the underwriting group back in 2005.

This former hi-flyer flameout has fallen over 80% from over $50.00 in the last 18 months to as low as $11.25 recently after a steady series of warnings. Shares traded up 2.5% yesterday and are trading up more than 3% at $12.45 pre-market.

Jon C. Ogg
May 9, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in any of the companies he covers.