- Polo Ralph Lauren (RL) to buy from hold at Citigroup.
- Qualcomm (QCOM) to buy from neutral at Roth Capital.
- Walgreen (WAG) to conviction buy from neutral at Goldman.
- Rockwell (ROK) to outperform from neutral at Credit Suisse.
- Carnival (CCL) to buy from hold at Deutsche Bank.
- SunTrust (STI) and TD Bank (TD) to outperform from market perform at Keefe Bruyette.
- Hawaiian Electric (HE) to outperform from neutral at RW Baird.
- Essex Property Trust (ESS) to outperform from neutral at Macquarie.
- Amgen (AMGN) to neutral from underperform at BofA/Merrill.
Patterson-UTI faces resistance just below $17. The stock closed Tuesday at $16.19, up 9.42% during the past month.
Option traders also look like they are preparing for a bearish move on iShares iBoxx $ Invest Grade Corp Bond (LQD). Traders bought 10,043.00 new put option contracts -- 7.92 times the average volume -- on the stock. A full 100% of these trades also came in on the ask price.
The stock closed Tuesday at $111.52, up 1.09% during the past month.
- Wells Fargo upgraded T. Rowe Price (TROW) to outperform from market perform, citing strong flows and a potential recovery in the U.S. equity markets.
- UBS upgraded BorgWarner (BWA) to buy from neutral and raised its price target to $50 from $48. The firm expects BorgWarner to benefit from fuel economy regulation.
- Cowen upgraded Celgene (CELG) to neutral from underperform, citing improved fundamentals and valuation for the upgrade.
- TRW Automotive (TRW) was upgraded to overweight from equal weight at Morgan Stanley.
- Finish Line (FINL) was upgraded to buy from hold at Citigroup.
- Jazz Pharmaceutical (JAZZ) was upgraded to overweight from equal weight at Barclays.
Here are some highlights from this past week's earnings coverage on BloggingStocks:
- Adobe Systems Inc. (ADBE) reported that Q1 revenue was up but earnings declined sharply, and it offered guidance.
- Best Buy Inc. (BBY) shares rallied after it topped Q4 earnings expectations and offered encouraging guidance.
- Brinker International Inc. (EAT) raised its outlook for fiscal 2010 and also increased its quarterly dividend.
- China Automotive Systems Inc. (CAAS) reported that its revenue had doubled and it beat earnings expectations.
- ConAgra Foods Inc. (CAG) Q3 earnings matched estimates and revenue was flat, and it reaffirmed its outlook.
- Finish Line Inc. (FINL) shares rallied after it reported that Q4 earnings came in better than analysts' expected.
FINL opened this morning at $15.55. So far today, the stock has hit a low of $15.35 and a high of $16.63. As of 11:50, FINL is trading at $16.55 up 1.89 (12.9%). The chart for FINL looks bullish.
- B. Riley upgraded Hot Topic (HOTT), citing valuation, increased holiday traffic once promotions began, and views upcoming difficult Q4/Q1 comps as a buying opportunity ahead of a turnaround. The firm has a target of $8.30 on shares.
- Wunderlich upgraded RAM Energy (RAME) as it believes that the company has successfully survived a difficult year. The firm thinks the company's debt level is high but manageable while its production should increase over the next several years. The firm set a $4 target on shares.
- Roth Capital upgraded Actuate (ACTU), citing recent share weakness, the recent Xenos deal and the improving economy, both of which should improve growth. The firm has a target of $5.50 on the shares.
- Finish Line (FINL) upgraded to buy from neutral at Stern Agee.
Here are a few highlights from this past week's earnings coverage on BloggingStocks:
- Cintas Corp. (CTAS) received an analyst's downgrade following its Q2 earnings report.
- ConAgra Foods Inc. (CAG) shares spiked after it posted better-than-expected Q2 earnings.
- Finish Line Inc. (FINL) posted surprise Q3 earnings, ending a streak of quarterly losses.
- Giga Media Ltd. (GIGM) was downgraded due to its disappointing Q2 report and lack of visibility.
Finish Line (FINL) is one of the few companies stepping into the earnings spotlight during this holiday-shortened week, and traders are so far reacting with enthusiasm to the retailer's third-quarter report. Finish Line banked a surprise profit of $6.6 million, or 12 cents per share, much improved from its year-ago loss of $8.8 million, or 16 cents per share.
Revenue for the period dwindled 0.2% to $240.1 million, even as same-store sales rose 1.7%. Gross margin ticked higher to 29.5% from 27%.
- B. Riley upgraded Finish Line (NASDAQ: FINL) to Buy from Neutral to reflect the potential for improving trends in second half of 2009. The firm raised its target on shares to $10.50 from $9.
- Merriman upgraded OptionXpress (NASDAQ: OXPS) to Neutral from Sell following the company's better than expected Q2 results. The firm notes higher commissions per trade more than offset weak DARTs and the decline in customer additions in the quarter.
- RBC Capital upgraded Gardner Denver (NYSE: GDI) to Outperform from Sector Perform and raised its target to $34 from $28 citing the additional scale of restructuring, better tone to end-markets, and few downside catalysts. Baird upgraded Gardner Denver to Outperform from Neutral and raised its target to $35 from $32 based on a bottom in fundamentals and compelling valuation.
- BE Aerospace (NASDAQ: BEAV) was upgraded to Outperform from Market Perform at FBR Capital.
- Shire (NASDAQ: SHPGY) was upgraded to Perform from Underperform at Oppenheimer.
- UnitedHealth (NYSE: UNH) was upgraded to Outperform from Neutral at Credit Suisse.
Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders KB Home (NYSE: KBH) and Lennar Corp. (NYSE: LEN) as investors look for any sign that the housing sector has bottomed (home sales numbers are also due out this week; see below). Analysts surveyed by Thomson Financial anticipate that both companies will report that they narrowed their losses in the most recent quarter.
KB Home's expected $1.25 per share loss, on revenue of $725.5 million, compares to the previous quarter loss of $3.30 and to a year-ago loss of $6.19. However, KB Home's losses in the past few quarters have been deeper than expected. The Los Angeles-based homebuilder's long-range earnings growth forecast is 10.5%, less than the S&P 500. Analysts continue to recommend holding KB Home, and have for at least 120 days. Shares
, however, reached a new 52-week high of $31.69 on Friday, and they are up 10.5% year to date.
Lennar is expected to post a loss of 52 cents per share, on revenue of $1.1 billion. That compares to the previous quarter's per-share loss of 76 cents and to a year-ago loss of $3.25. While Lennar also has tended in the past few quarters to miss expectations, the Miami-based company managed a positive surprise in the first quarter of 2008. Lennar's long-range earnings growth forecast is 10.3%, about the same as KB Home's. Analysts also recommend holding Lennar.
Friday, shares of Lennar also reached a 52-week high, $27.75, but they are down 6.4% year to date.
- Societe Generale upgraded shares of Credit Suisse (NYSE: CS) to Buy from Sell as they believe the company is the European investment bank investors should own as sentiment gradually improves.
- Societe Generale also raised Deutsche Bank (NYSE: DB) to Hold from Sell as they believe it has managed the credit crisis well and that the government bailout of the GSEs will improve investor sentiment.
- Citigroup upgraded shares of Kimberly Clark (NYSE: KMB) to Buy from Hold as they expect the company to benefit from falling materials and energy prices. The firm raised their target to $71 from $60.
- UST Inc (NYSE: UST) was lifted at Morgan Stanley to Equal Weight from Underweight.
- Corning (NYSE: GLW) was upgraded to Overweight from Market Weight at Thomas Weisel.
- Credit Suisse downgraded the U.S. Homebuilders sector to Market Weight from Overweight to reflect deteriorating traffic trends and higher valuations. In addition, the firm cut Toll Brothers (NYSE: TOL), Pulte Homes (NYSE: PHM), D.R. Horton (NYSE: DHI) and KB Home (NYSE: KBH) to Neutral from Outperform.
The Finish Line (NASDAQ: FINL) is a mall-based specialty retailer, offering athletic and casual footwear and sportswear through 699 Finish Line stores in 47 states. Featured brands include Nike, Puma, Jordan, Lacoste and Adidas. The firm also sells urban street wear through 94 Man Alive outlets in 19 states. Foot Locker (NYSE: FL) and The Sports Authority are major competitors.
The firm pleased investors late last month, when it reported fiscal Q1 EPS of two cents and revenues of $287.9 million. Analysts had been looking for a loss of five cents and $281.3 million. In discussing the positive quarter, the CEO cited successful application of strategic merchandising and inventory management programs. B. Riley subsequently upgraded the shares to "buy" and Sterne Agee reiterated its "buy" call.
It is going to be an interesting week. The Fed and oil will be at odds, and tempers are sure to flare on the trading floors. There are many earnings and eco reports we are looking at, and it is hard to choose which will be front and center. Traders and investors will be closely following every move by the Fed as they will be releasing a policy statement at 2:15 p.m. on Wednesday.
Also, stocks within the homebuilders group will be front and center as a few key players will share their earnings results. Have you seen the charts of these companies lately? Click for a good comparison. And after you take a peek, you may also wonder if they are actually stock charts or ski slopes. So with that as the backdrop, here are a few names that may actually be undercovered and worth a look.
Tuesday, June 24
Anything related to the automobile industry has been under siege of late, and I can't imagine how that will change anytime soon. HB Fuller Co. (NYSE: FUL) is involved in the manufacturing of the industrial performance/adhesive products for the assembly/packaging and automobile markets. The fact that the economy is lagging would lead one to the realization that, unless we see a quick turnaround of epic proportions, the reality of a lower share price will come with the next earnings release. Several down days of late have also had increasing volume, and that is not a good sign for a stock that is beginning to show signs of breaking down. Even so, First Call is showing a $0.45 per share quarterly estimate on $347 million of revenue.
The chancery court in Nashville, Tennessee found that GCO did not commit fraud in the sale of the company to FINL, and ruled FINL to proceed with the acquisition of GCO.
FINL, with a market cap of $145 million, announced on June 18, 2007 the acquisition of all of GCO outstanding shares for $54.50 in cash.
Goldman Sachs says: "Litigation surrounding the transaction is far from over and completion of the transaction remains uncertain."
GCO overall option implied volatility of 102 is above its 26-week average of 36 according to Track Data, suggesting larger risk.
FINL overall option implied volatility of 155 is above its 26-week average of 85 according to Track Data, suggesting larger risk.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Yesterday, U.S. stocks tumbled on the assassination news -- fearing further unrest in one of U.S.'s allies in its war on terror in Afghanistan and due to weaker-than-forecast rise in durable-goods orders. The positive consumer confidence report couldn't offset the news. The Dow industrials dropped 192 points, or 1.42%, the Nasdaq Composite fell 47 points, or 1.75%, and the S&P 500 lost 21 points, also 1.42%.
News that could be moving the market this morning include talk of big bank asset sales and later some data that is due out: