Crude surpassed $126.00 before retreating down by $1.85 to $124.11 late in the day. Many are citing that the interest in owning the dollar is also partly to thank for today's gains. Below are the unofficial closing bell prices for major index levels:
AnnTaylor Stores Corp. (NYSE: ANN) rose today after it forecast that first quarter profit will exceed projections. Additionally, the women's apparel store reported its plans to drop its older women fall line but push the opening of its Loft outlets. Shares were up 16% at $28.50 in the final minutes of trading.
ImClone Systems (NASDAQ: IMCL) shares are falling after an analyst at Morgan Stanley downgraded the stock to Underweight from Equal Weight, saying that an upcoming drug study announcement will not please investors. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on IMCL.
After hitting a one-year low of $30.34 in August, the stock hit a one-year high of $49.18 in April. This morning, IMCL opened at $42.66. So far today the stock has hit a low of $41.94 and a high of $43.49. As of 12:40, IMCL is trading at $42.02, down $2.81 (-6.3%). The chart for IMCL looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in six weeks as long as IMCL is below $50 at June expiration. Hershey would have to rise by more than 18% before we would start to lose money.
IMCL hasn't been above $50 at all in the past year and has shown resistance around $47.50 recently. This trade could be risky if the company continues its upward climb, but even if that happens, this position could be protected by resistance IMCL might find around $49, where the stock topped over the past month.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in IMCL.
JP Morgan raised El Paso (NYSE:EP) from "neutral" to "over weight", according toBriefing.com. The news agency also reports that RBC upgraded Ericsson (NASDAQ:ERIC) from "sector perform" to "outperform"
20 Most Profitable Tech Companies Among Fortune 1000 techs, Microsoft remains on top, taking in $14.1 billion in earnings last year. IBM, Cisco, Hewlett-Packard and Intel round out the top five most profitable. 20 most profitable tech companies - FORTUNE
Imclone Systems Inc. (NASDAQ: IMCL) shares are rising today after an analyst at Citigroup upgraded the stock to "Buy" from "Hold." Citi posted a $52 price target for IMCL and expects to hear good news at an upcoming conference. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on IMCL.
After hitting a one-year high of $47.94 in October, the stock hit a one-year low of $30.00 last March. IMCL opened this morning at $44.81. So far today the stock has hit a low of $43.61 and a high of $45.20. As of 11:33, IMCL is trading at $43.80, up $0.71 (1.7%). The chart for IMCL looks bullish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just two months as long as IMCL is above $35 at May expiration. ImClone would have to fall by more than 20% before we would start to lose money.
Freddie Mac (NYSE: FRE) was downgraded to Sell by Merrill Lynch due to the credit crisis.
More analyst calls from Briefing.com:
Arcelor Mittal (NYSE: MT) was upgraded by Deutsche Securities from Holdto Buy. MT shares are up 3.75% in premarket trading.
Imclone (NASDAQ: IMCL) was upgraded at Cowen & Co from Neutralto Outperform.
Barrick Gold (NYSE: ABX) was downgraded by UBS from Buyto Neutral , and the target price lowered from $55 to $56
Gilead Sciences (NASDAQ: GILD) was downgraded by Bernstein from Outperformto Mkt Perform
Amazon.com, Inc. (NASDAQ: AMZN) shares took quite a hit Thursday, finishing the session down just over 5% "after founder and CEO Jeff Bezos sold more than $135 million worth of shares in his first insider sale in more than three years."
MOST NOTEWORTHY: The U.S. beverage sector, ImClone, Starwood Hotels and Marriott International were today's noteworthy upgrades:
Goldman Sachs upgraded the U.S. beverage sector, including Coca-Cola (NYSE: KO), Molson Coors Brewing Company (NYSE: TAP), Anheuser Busch Companies (NYSE: BUD), PepsiAmericas Inc (NYSE: PAS) and Coca-Cola Enterprises (NYSE: CCE) to Attractive from Neutral. The firm cited expectations for a stronger 2008, benign commodity cost outlook, better than expected US beer demand, and valuations. Goldman upgraded shares of PepsiCo Inc (NYSE: PEP) to Buy from Neutral citing valuation and improving industry fundamentals.
Bear Stearns upgraded ImClone (NASDAQ: IMCL) to Outperform from Peer Perform citing positive Flex trial results and the new market opportunity for Erbitux.
Thomas Weisel upgraded Starwood Hotels (NYSE: HOT) and Marriott International (NYSE: MAR) to Market Weight from Underweight based on healthy August trends, credit market may ease concerns over supply growth, and valuations.
IMCL, an oncology care company, is recently trading up $11.05 to $48.98 in pre-open trading.
Merck KGaA & IMCL announced that Erbitux met the primary endpoint outcomes from the FLEX trial (a phase 3 study of 1000 patients with previously untreated non-small cell lung cancer).
Goldman Sachs says, "Erbitux data in lung cancer positive for IMCL, Minor neg for DNA."
IMCL October option implied volatility of 46 is above its 26-week average of 40 according to Track Data, suggesting larger price risks.
Genentech (NYSE: DNA) September volatility at 21 prior to IMCL's NCSCLC data.
DNA is recently trading at $76 in pre-open trading, below its close of $79.15.
Merck KGaA & IMCL announced that Erbitux met the primary endpoint outcomes from the FLEX trial (a phase 3 study of 1000 patients with previously untreated non-small cell lung cancer (NSCLC).
DNA September option implied volatility is at 21; October is at 25. DNA's average option implied volatility over the last 26-weeks is 24 according to Track Data, suggesting non-directional near term price fluctuations.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
ImClone Systems (NASDAQ: IMCL) shares are up nearly 30% in premarket trading. ImClone Systems and Bristol-Myers Squibb (NYSE: BMY) said that a Phase III study of Erbitux combined with platinum-based chemotherapy improved overall advanced non-small-cell lung cancer patient survival compared with chemotherapy alone. BMY shares are up 3% in premarket trading. German drugs group Merck KGaA (not MRK) conducted the study and its shares also jumped 6% in Frankfurt.
Countrywide Financial Corp (NYSE: CFC) troubles aren't over as yesterday it found out from regulatory filings that its largest shareholder, AllianceBernstein LP, has cut its stakes in the mortgage lender. Another shareholder, Barclays Global Investors, did the same. Meanwhile, according to the New York Post, Countrywide is working to structure another strategic investment similar to the $2 billion deal with Bank of America Corp (NYSE: BAC) last month.
Expect some action in PepsiCo (NYSE: PEP) as it was upgraded to Buy from Hold at Goldman Sachs, citing valuation. Goldman upgraded the beverage sector from Neutral to Attractive due to its defensive nature along with improving fundamentals and reasonable valuation.
After GE's (NYSE: GE) NBC Universal pulled its television shows from sale on Apple Inc.'s (NASDAQ: AAPL) iTunes store, many expected News Corp. (NYSE: NWS) to follow. Well, today News Corp said it will not pull its television shows from iTunes.
Auto industry executives have been speaking that past day: Ford Motor Co's (NYSE: F) John Fleming, the president and chief executive officer of Ford of Europe, said he isn't expecting to make big market share gains in Europe in the near future. General Motors Corp (NYSE: GM) Chief Executive Officer Rick Wagoner blamed the softness in the housing market for weakness in vehicle sales.
MOST NOTEWORTHY: RadioShack Corp (RSH), Visual Sciences (VSCN), Alcan (AL), U.S. Celluar (USM) and Westwood One (WON) were today's noteworthy downgrades:
Banc of America downgraded shares of RadioShack (NYSE: RSH) to Sell from Neutral and lowered their target to $18 from $26 as they believe cuts to labor costs and advertising expenses will make it more difficult to overcome declining wireless trends.
Friedman Billings cut Visual Sciences (NASDAQ: VSCN) to Market Perform from Outperform on valuation. Citigroup downgraded Alcan to Hold from buy on the acquisition news.
Soleil cut U.S. Celluar (AMEX: USM) to Sell from Hold on valuation.
Westwood One (NYSE: WON) was downgraded to Sell from Hold at Citigroup based on management distractions and weak fundamentals...
OTHER DOWNGRADES:
Cowen removed ImClone Systems (NASDAQ: IMCL) from its Focus List, as the firm believes Erbitux is now more in line with consensus but said financials remain uninspiring.
Hilton Hotels closed up 9.34 to $45.39 today on news the company agreed to be acquired by Blackstone Group (NYSE: BX) in a deal valued at $26 billion. A reader pointed out interesting activity on Hilton Hotels.
With the stock up, let's look and see how many "lucky" traders picked up calls on the stocks. A call option gives the buyer the right to buy the stock at a set price. If you think a stock is going to go up you can buy the right to buy that stock at a set price, in the hopes that it does in fact go up, as you expect.
The Hilton July 35 calls (HLTGG) had a volume of 3,660 Tuesday with a high price of $1.90. That is above the average volume of 314 calls per day since the options were issued and just above the previous record high daily volume of 3,616 on 5/31. Those calls are now worth about $10.50 a piece so a 450% gain over two days isn't bad. I have to say this looks suspicious; sort of like a man running from a bank with a bag of money.
Looking at the Hilton August 40 calls (HLTHH) it becomes a little more obvious. Tuesday there were 5,844 contracts for 0.85 cents or less. In the past three weeks -- since the options came out there were only a total of 70 contracts traded. The contracts bought Tuesday are now worth about $5.80 a piece. A 582% gain in two days, representing about $2.8 million in profits.
If that isn't enough money ...there is more. The July 40 calls (HLTGH) saw 3,312 contracts trade Tuesday for less than 0.40. Now at 5.50 it is a 1,275% return for another $1.6 million in profits.
While I do not know who made the trades, their intentions and what they knew when; I am betting they will soon be getting a call from the SEC. In all fairness, just because I see a man wearing a black ski mask running out of the bank carrying a bag of money and a gun doesn't mean he is a bank robber. These trades could be legit, but they trades have all the tell-tale signs of insider trading. By the way has anyone been following Paris recently? Has she been meeting with Martha Stewart?
Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.
Procter & Gamble was downgraded to Equal Weight from Overweight at Lehman, as the firm does not expect margin upside or sustained re-acceleration of revenue growth in FY08.
Morgan Stanley downgraded shares of ImClone to Underweight from Equal Weight, as the firm believes growth expectations and valuation are ahead of themselves after "underwhelming" CRYSTAL and second line colon cancer data.
Avaya was downgraded to Hold from Buy at Kaufman Brothers, which views other bidders as "unlikely."
IDT Corporation (NYSE: IDT) was downgraded to Sell from Hold at Stanford to reflect the company's accelerating cash burn, valuation and lack of a turnaround.
JP Morgan downgraded Volvo (NASDAQ: VOLV) to Underweight from Neutral on valuation.
PDL BioPharma Inc (NASDAQ: PDLI) was downgraded to Market Perform from Outperform at Wachovia based on valuation and lack of catalysts.
Biotechnology industry expert John McCamant last recommended ImClone Systems (NASDAQ: IMCL) in the mid-1990s at $5 a share, and later sold at $42. Now, he has issued a trading alert, once again recommending the shares.
Two events, he says, are the basis of his new buy. The editor of The Medical Technology Stock Letter says, "The first event was Amgen's failed clinical trial of their competing product, Vectibix, when used in combination with Avastin and FOLFOX for the treatment of front-line metastatic colorectal cancer."
This, he notes, has "significantly strengthened" the competitive position of Imclone's Erbitux versus Vectibix. The second event, he adds, was the recent failure of Erbitux in the pancreatic cancer setting, which caused the stock to sell off.
McCamant explains, "This is a low impact event for Erbitux, and, in fact, they have other trials running in pancreatic that may still pan out."
ImClone Systems Inc. (NASDAQ: IMCL) and Bristol-Myers Squibb Co. (NYSE: BMY) announced that first line Phase III study of Erbitux (Cetuximab) combined with platinum-based chemotherapy met the primary endpoint of increasing overall survival in patients with recurrent and/or metastatic squamous cell carcinoma of the head and neck. Merck KGaA, which licensed the right to market Erbitux outside the United States and Canada from ImClone, shares rose 1.4% higher in Frankfurt as the estimated market for Erbitux could peak at €800 million in Merck's territory.
Executives from Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) and Caterpillar Inc. (NYSE: CAT) said in a conference yesterday that despite some weakness in the U.S., global market for metals is still tight and demand keeps growing. Heavy equipment makers say orders continue to grow and indicate optimism.
eBay Inc. (NASDAQ: EBAY) shares gained 2.4% in yesterday's session, closing at $33.80, following a positive outlook from a Bear Stearns analyst who also raised his first-quarter revenue estimate.
A day after automakers reported sales where the Big 3 posted further declines while Toyota Motor Corp. (NYSE: TM) and Honda Motor (NYSE: HMC) reported over 11% sales growth, Morgan Stanley will open its global automotive conference in New York today. Prudential Securities initiated coverage of automakers: DaimlerChrysler AG (NYSE: DCX) at Neutral and a $58 target price, Ford Motor Co. (NYSE: F) with Underweight and a $6 target, General Motors Corp. (NYSE: GM) also with Underweight and a $26 target, Honda at Overweight with $46 target and Toyota with Overweight and $151 target price.
General Electric Co.'s (NYSE: GE) NBC Universal unveiled its international growth plans as it attempts to increase (double) broadcasting revenue outside the US. NBC plans to launch 20 TV channels across Europe, Asia and Latin America over the next two to three years.
After Pfizer Inc. (NYSE: PFE) signed a distribution pact only last month to sell its prescription drugs through a single wholesaler, Britain's government competition watchdog began investigating the supply of medicines across the country.
Microsoft Corp. (NASDAQ: MSFT) has filed five new lawsuits against U.S. companies and individuals claiming they sold student-only software not meant for retail distribution.\
Wal-Mart Stores Inc. (NYSE: WMT) is about to have another PR nightmare as a former employee alleges he was part of a security unit, Wal-Mart's Threat Research and Analysis Group, that monitored workers, business partners and shareholders of the discount retailer, according to the Wall Street Journal. It's possible an employee was even sent to infiltrate an anti-Wal-Mart group.
The markets had mixed action ending slightly higher with semiconductors and auto manufacturers making gains while oil-well services were weaker. Oil prices continued rising with May futures up $0.53 to $62.22 a barrel. The Dow Jones Industrial Average managed to pull in a 3% gain this week; its best week in four years.
The NYSE had volume of 2.5 billion shares with 1,846 shares advancing while 1,375 declined for a gain of 24.58 points to close at 9,338.4. On the NASDAQ, 1.6 billion shares traded, 1,593 advanced and 1,432 declined for a gain of 4.44 to 2,456.18.
Stocks moving today included: DaimlerChrysler (NYSE:DCX), which rose $4.76 (6%) to $82.36 on rumors of a bid. Those positive vibes rubbed off on General Motors (NYSE:GM) which gained $1.67 (6%) to $31.99. Amgen Inc. (NASDAQ:AMGN) dropped $2.45 (-4%) to $58.02 after halting a drug trial on Vectibix. The bad news for AMGN helped the competitor ImClone Systems (NASDAQ:IMCL) jump $4.62 (14%) to $38.50. Jabil Circuit (NYSE:JBL) fell $2.67 (-11%) to $22.26 on lower guidance due to restructuring.
In options today there were 3.5 million puts and 3.7 million calls traded for a put-call ratio of 0.92. For a third day in a row Motorola Inc. (NYSE:MOT) saw volume on calls . The April 17.50 calls (MOTDW) traded 30,000 options trading while the May 19 calls (MOTET) moved 28,000 options trading. Apple Inc. (NASDAQ:AAPL) saw heavy volume on the April 95 calls (QAADS) with over 23,400 options trading. With the bad news on the halted drug trial for Vectibix, put buyers snapped up contracts. Amgen Inc. (NASDAQ:AMGN) saw heavy volume on the April 70 puts (YAAPN) with over 39,900 options trading. The next strike up also saw action with the April 72.50 puts (YAAPV) moving 37,000 options trading. If you buy a put it will protect you if the stock falls. Halliburton Co. (NYSE:HAL) saw heavy volume on the April 40 puts (HALPH) and April 40 calls (HALDH) with over 26,000 options trading on each.
Kevin Kersten is an analyst with InvestorsObserver. DISCLOSURE NOTE: Mr. Kersten owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.
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