Analyst Upgrades

• Sapient (SAPE) to outperform from market perform at Wells Fargo.
• Kroger (KR) to buy from neutral at UBS.
• Harman (HAR) to overweight from neutral and Deutsche Bank (DB) to neutral from underweight at JPMorgan.
• Savient (SVNT) to outperform from market perform at JMP Securities.
• LabCorp (LH) to buy from hold at Deutsche Bank.
• Optimer Pharm (OPTR) and Landstar System (LSTR) to outperform from neutral at RW Baird.
• Essex Property Trust (ESS) to buy from neutral at Janney Capital.
• Tyson Foods (TSN) to neutral from sell at Goldman.
• Host Hotels (HST) to outperform from sector perform at RBC Capital.
• SPX Corp. (SPW) to outperform from market perform at FBR Capital.

Continue reading Analyst Calls: AXP, COF, DB, DFS, DNDN, HST, KR, ROC, SAFM, STJ, TSN ...

Analyst Calls: AXP, COF, DB, DFS, DNDN, HST, KR, ROC, SAFM, STJ, TSN ... originally appeared on BloggingStocks on Wed, 01 Dec 2010 12:00:00 EST. Please see our terms for use of feeds.

When KKR and Goldman Sachs walked away from the $8 billion buyout of Harman (NYSE: HAR), it looked like there would be a massive legal fight.

But that's been cleverly avoided. KKR and Goldman have agreed to buy about $400 million in Harman's convertible debt. The conversion rate is $104, which means that there is hope that the stock will make a comeback (the current stock price is about $86).

More importantly, KKR and Goldman will avoid paying a $225 million break-up fee.

True, it's not perfect. But, then again, this is a compromise, right? A legal fight would a big drain, in terms of money and time. Besides, this agreement is a sign of a new trend in private equity - that is, making minority investments. With a lack of big-time financing, it looks like private equity firms may have no other choice.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Harman makes nice with KKR and Goldman originally appeared on BloggingStocks on Mon, 22 Oct 2007 16:15:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• ING Group upgraded shares of BT Group (NYSE: BT) to Hold from Sell to reflect the company's more stable revenue trend and improving cash flow generation.
  
• Deutsche Bank upgraded shares of Luminent Mortgage Capital (NYSE: LUM) to Hold from Sell, as they believe the company's portfolio is beginning to stabilize and its liquidity has improved.
  
• Goldman upgraded Cognos Inc (NASDAQ: COGN) to Buy from Neutral following its Q2 report.
  
• Thor Industries (NYSE: THO) was raised to Sector Perform from Underperform at RBC Capital Markets. The firm's checks indicate strengthening backlog and lower promotional spending.
  
• Roth Capital believes Watson Pharmaceuticals (NYSE: WPI) is about to enter a growth phase with Paul Bisaro at the helm and is positive on Silodosin potential. The firm upgraded shares to Buy from Hold.

• Bank of the Ozarks (NASDAQ: OZRK) was upgraded to Buy from Neutral at B. Riley.
  
• Bear upgraded Harman International (NYSE: HAR) to Outperform from Market Perform.
  
• Goldman upgraded Packagaing Corporation (NYSE: PKG) and Smurfit-Stone Container (NASDAQ: SSCC) to Buy from Neutral.
  
• Friedman Billings raised Conseco Inc (NYSE: CNO) to Outperform from Market Perform.

Analyst upgrades: BT, LUM, COGN, THO and WPI originally appeared on BloggingStocks on Fri, 28 Sep 2007 11:00:00 EST. Please see our terms for use of feeds.

Bond market mending its wounded ways originally appeared on BloggingStocks on Fri, 28 Sep 2007 10:15:00 EST. Please see our terms for use of feeds.

Since the dog days of August, a chill has spread through the hallowed halls of private equity. $350 billion worth of leveraged buyout loans are sitting on the books of banks, looking for a home with investors. While one deal that was on the rocks, First Data's acquisition by KKR, managed to close, there are others, like J.C. Flowers' proposed $60 a share takeover of SLM Corp. (NYSE: SLM) which have fallen through.

As more and more deals go the way of Sallie Mae, you'll be hearing a lot more of the expression Material Adverse Change (MAC). MAC is a standard contract clause in a merger agreement which gives the acquirer the right to back out of a deal if there is a material adverse change -- an unexpected and permanent impairment in the value of the company. If an acquirer can successfully "call a MAC," it can get out of a deal without paying the breakup fee.

In the case of the SLM deal, J.C. Flowers announced it was backing out due to legislation signed by the president which makes the student lending business less attractive by cutting subsidies to student-loan providers, thus reducing Sallie Mae's profit prospects. In the case of KKR and The Goldman Sachs Group's (NYSE: GS) effort to welch on its proposed deal to acquire Harman International (NYSE: HAR), the MAC is an earnings report that came in lower than expected -- 93 cents instead of $1.22.

Continue reading Private equity freeze claims Sallie Mae (SLM) and Harman (HAR) deals -- who's next?

Private equity freeze claims Sallie Mae (SLM) and Harman (HAR) deals -- who's next? originally appeared on BloggingStocks on Thu, 27 Sep 2007 14:00:00 EST. Please see our terms for use of feeds.

KKR is known as a tough negotiator. After all, the firm walked from its $8 billion deal for Harman International (NYSE: HAR), which crushed the stock by 24% on Friday.

But, as for the First Data Corp. (NYSE: FDC) transaction, KKR is certainly jazzed. Despite talk that financing had dried up, it now looks like the debt offering is oversubscribed -- at least for a $5 billion tranche (this is according to a story in Bloomberg.com). Although, to generate more demand, there was a 4% discount on the notes.

But for the most part, it looks like things should pan out and based on the stock price of First Data, Wall Street also agrees.

Does this mean things will get easier for other deals? To some degree, I think the answer is yes. Liquidity is coming back into the system and fear is dissipating.

However, I think there will still be some carnage, especially for those deals that may not have the strong fundamentals of First Data or that were aggressively priced and structured.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

First Data (FDC) deal lookin' good originally appeared on BloggingStocks on Sun, 23 Sep 2007 11:40:00 EST. Please see our terms for use of feeds.

At mid-summer, it would have been hard to imagine any of the large private equity deals like First Data Corp. (NYSE: FDC) and Harman International (NYSE: HAR). Harman is hardly an unknown entity. It was started more than 50 years ago. It built the first car radio in 1948. The company has a large customer base that includes most of the major car companies.

In the fiscal year ending June 30, Harman's revenue rose 9% to $3.55 billion. Net income was up 23% to $314 million. Not bad. But, in the fourth quarter of the fiscal, operating income was down, as cost of sales and expenses both rose.

Yesterday. KKR and Goldman Sachs (NYSE: GS) said that they were pulling the plug on the $8 billion deal to take Harman private. The said that Harman had breached the "material adverse effect" clause of the buyout agreement. In other words, Harman's business had gotten much worse.

Maybe. What the court will ask, and this is almost certainly going to court, is whether Harman's financial situation took a significant turn for the worse. Or, did they buyers simply believe that the credit markets had turned against them by making capital unusually expensive. Better to face,and perhaps lose a lawsuit than to default on billions of dollars worth of bonds.

Continue reading As KKR and Goldman Sachs (GS) walk on Harman (HAR), other deals in trouble

As KKR and Goldman Sachs (GS) walk on Harman (HAR), other deals in trouble originally appeared on BloggingStocks on Sat, 22 Sep 2007 11:40:00 EST. Please see our terms for use of feeds.

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• Banc of America downgraded shares of Dendreon Corp (NASDAQ: DNDN) to Sell from Neutral following the FDA's request for additional clinical data for Provenge.

• HSBC cut Whole Foods Market (NASDAQ: WFMI) to Underweight from Neutral after the second quarter miss.

• BMO Capital downgraded Rio Tinto plc (NYSE: RTP) to Underperform from Market Perform based on valuation.

• El Paso Corp (NYSE: EP) was cut to Sell from Buy at Matrix after the company's weak operating performance.

• Merriman downgraded shares of Oplink Communications (NASDAQ: OPLK) to Sell from Neutral based on concerns over the OCP acquisitions and inventory...

• 24/7 Real Media, Inc (NASDAQ: TFSM) was cut to Hold from Buy at Jefferies.

• Credit Suisse downgraded shares of RadioShack Corp (NYSE: RSH) to Neutral from Outperform.

• Bear Stearns cut Harman International Industries (NYSE: HAR) to Peer Perform from Outperform.

• Piper Jaffray downgraded shares of Cache, Inc (NASDAQ: CACH) to Market Perform from Outperform.

• Restoration Hardware, Inc (NASDAQ: RSTO) was cut at Caris to Average from Above Average.

Analyst downgrades 5-10-07: CACH, RSH, RTP and WFMI originally appeared on BloggingStocks on Thu, 10 May 2007 11:12:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• BWS Financial downgraded Amazon.com Inc (NASDAQ: AMZN) to Hold from Buy citing valuation.

• Jefferies cut WellCare Health Plans Inc (NYSE: WCG) to Underperform from Hold and lowered their target to $69 from $80 as the firm believes higher-than-expected medical costs in Georgia will put significant pressure on earnings.

• Citigroup downgraded Agrium Inc (NYSE: AGU), CF Industries Holdings, Inc (NYSE: CF), Potash Corp (NYSE: POT) and Terra Industries Inc (NYSE: TRA) to Hold from Buy given the year-to-date share appreciation, as their analysis suggests near-term positive earnings revisions are near a peak and should slow going forward. Citigroup remains positive on the fertilizer industry over the long-term.

• Keefe Bruyette downgraded Federated Investors, Inc (NYSE: FII) to Market Perform from Outperform citing the potential impact from Bank of New York Co (BK)/ Mellon Financial Corp (MEL) transactions.

• Jefferies cut Amerigroup Corp (NYSE: AGP) to Underperform from Hold with a $25 target.

• Stephens downgraded Pacer International, Inc (NASDAQ: PACR) to Equal Weight from Overweight.

• Atlantic Equities downgraded Adobe Systems Inc (NASDAQ: ADBE) to Neutral from Overweight.

• Harman International Industries Inc (NYSE: HAR) was taken down to Hold from Buy at Gabelli.

Analyst downgrades 4-30-07: ADBE, AMZN, AGP and POT originally appeared on BloggingStocks on Mon, 30 Apr 2007 11:07:00 EST. Please see our terms for use of feeds.