MOST NOTEWORTHY: BMC Software, Smart Modular and Entropic Comm were today's noteworthy initiations:
Stanford initiated BMC Software (NYSE: BMC) with a Buy rating and $45 target. The firm highlights the company's broad product portfolio and configuration management database leadership and thinks margin expansion should continue.
ThinkPanmure assumed Smart Modular (NASDAQ: SMOD) with an Accumulate rating and $5.50 target. The firm expects better DRAM pricing but expects SMOD to experience some headwinds with Hewlett-Packard (HPQ) losing share in the server market.
Broadpoint expects Entropic Comm (NASDAQ: ENTR) to benefit from the adoption of applications that allow video through numerous devices, especially high definition and data content. Shares were started with a Buy rating and $6 target.
Politicians this week have come up with a brilliant plan. Oh, let's blame the recent oil price hike on speculators, why don't we? This way, we can continue not doing anything about energy prices and oil's scarcity and still keep our jobs. Let's just deflect attention from us and our inaction and blame it all on those commodity traders.
Okay, of course, anyone who manipulates oil prices, inflating them artificially and causing us to pay $4 a gallon at the pump as a result while making a nice juicy profit on our backs, should pay. No doubt. But here's a thought: what if these speculators are doing us a service?
I'll use a line from Syriana: "It's running out." We all know it. At some point there will be no more oil, or it will become so scarce that $4 a gallon will sound like a joke, like my grandma telling me about those five-cent movie tickets (I still think she was pulling my leg!). And barring any alternative energy found to heat our homes, fuel our cars and power our factories, it is not difficult to envision doomsday scenarios.
So perhaps, instead of reaching that crucial stage and having to start scrambling for solutions then, perhaps the recent oil price hikes have done us more good than harm. It put the problem of oil and energy in the forefront; it made the problem too big to be ignored, brushed aside. Indeed, there has never been this much news and these many resources diverted to alternative energy as there has been in the past year (at least it feels that way).
The high price of oil has repercussions throughout the economy; it trickles down to the smallest of items and we've only been experiencing the beginning. The effect on prices is lagging. Still, only Wednesday Dow Chemical (NYSE: DOW) announced a price increase of up to 20% to offset these higher costs. Dow's CEO blamed Washington for not listening to industrialists when they demanded action for years.
After hitting a one-year high of $194.92 in December, the stock hit a one-year low of $110.25 in March. This morning, ICE opened at $159.37. So far today the stock has hit a low of $156.07 and a high of $159.90. As of 12:00, ICE is trading at $156.57, down $3.15 (-2.0%). The chart for ICE looks bullish and steady, 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 September bear-call credit spread above the $200 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 four and a half months as long as ICE is below $200 at September expiration. ICE would have to rise by more than 24% before we would start to lose money. Learn more about this type of trade here.
ICE hasn't been above $195 at all in the past year and has shown resistance around $167 recently. This trade could be risky if the company's earnings (due out in late July) are a positive surprise, but even if that happens, this position could be protected by resistance ICE might find around $195, where it topped out back in January. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in ICE.
Genomic Health Inc (NASDAQ: GHDX) was raised to Outperform from Sector Perform at RBC Capital, as they believe momentum for the company's Oncotype Dx test is building based on inclusion in new clinical guidelines and expanded reimbursement.
Alphatec Holdings Inc (NASDAQ: ATEC) was upgraded to Buy from Source of Funds at Think Equity, citing the new CEO's efforts to overhaul the company, which has positioned it for growth.
MOST NOTEWORTHY: BMC Software, Cynosure and ADC Telecomm were today's noteworthy upgrades:
Credit Suisse upgraded BMC Software (NYSE: BMC) to Outperform from Neutral based on an improving pricing environment for mainframe software, growth expectations, and upcoming release of IBM (NYSE: IBM) mainframe hardware.
Cynosure (NASDAQ: CYNO) was upgraded to Buy from Hold at Citigroup. The firm upgraded shares after yesterday's sell-off as their checks suggest no notable reduction in demand in Q4.
Merriman upgraded shares of ADC Telecommincations (NASDAQ: ADCT) to Buy from Neutral on the company's strong margin performance in Q4, prospects for growth and attractive valuation.
In this generally difficult market, there are still areas that are hot, and the energy futures market is one such area. One place that benefits from the solid business in futures trading is the exchange itself where such futures are traded. NYMEX Holdings, Inc. (NYSE: NMX) is the largest exchange for energy futures and options contracts trading in the world.
Additionally, it trades contracts for gold, silver, copper, aluminum and other metals. The company went public in 2006, and despite some stumbles along the way, I like the direction it is heading. In 2006, it began using Chicago Mercantile Exchange's Globex electronic trading platform, which has proven a terrific move. Analysts believe that these two firms have merger potential.
This pick isn't without its risks. Certainly, exchanges are highly susceptible to regulatory changes. NYMEX has competition as well, in the form of IntercontinentalExchange, Inc. (NYSE: ICE). Prior to NYMEX starting its electronic trading, Intercontinental was able to capture roughly half of its crude oil market share. While NYMEX has managed to get most of this business back, no question that Intercontinental is an competitor to keep your eye on.
Progenics Pharmaceuticals (NASDAQ: PGNX) was added to Friedman Billings' Top Picks list and its Outperform rating was maintained. The firm has a high degree of confidence in the success of the MNTX Ph III studies in post-operative ilieus, as well as the FDA approval of the subcutaneous injection in terminally ill patients with opiod-induced constipation around the 1/31/07 PDUFA date.
RBC believes margin expansion will drive long-term appreciation in Tyco Electronics Ltd (NYSE: TEL) and started shares with an Outperform rating and $41 target.
PharMerica Corporation (NYSE: PMC) was initiated with an Underperform rating at Bear Stearns. The firm believes PMC will be pressured by customer losses and generic reimbursement cuts and sees shares trading in $12-$13 range.
OTHER INITIATIONS:
Ryanair Holdings (NASDAQ: RYAAY) was initiated with a Market Outperform rating at Avondale.u
I usually tend to favor the study and analysis of value-oriented professional portfolios over growth-oriented one. After the past week's volatility, however, I've seen many growth stocks begin to offer buying opportunities. [Image source: InvestorPlace.com.]
Louis Navellier is a very well-known growth investor who writes the Blue Chip Growth newsletter and manages Navellier & Associates, a $4.5 billion fund focused on finding stocks that "should contribute significantly to overall portfolio outperformance against relative benchmarks."
Because the fund owns so many stocks, I'm only going to focus on Navellier's favorite industries, or themes, and the favorite ideas within each one. If you read through Navellier's 'position sheet,' it should become pretty apparent that the several themes he's currently riding in the market, are big tech, exchanges and oil service companies
Chicago Mercantile Exchange Holdings Inc. (NYSE: CME) opened at $533.30. So far today the stock has hit a low of $533.30 and a high of $539.45. As of 10:55, CME is trading at $535.87, up $2.47 (0.5%).
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $500 range.CME hasn't been below $500 for more than a day since November and has shown support around $508 recently. This trade could be risky if broader markets take a tumble, but CME is not scheduled to report earnings until the week after July expiration.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CME, BOT, or ICE.
Cavium Networks was initiated with a Strong Buy rating and $25 target at JMP Securities. The firm's checks indicate significant momentum for Cavium's products and cites good visibility. Cavium was also initiated with a Market Weight rating at Thomas Weisel, which finds shares fairly-valued at current levels, with a Buy rating and $25 target at Needham, with an Equal Weight rating and $22 target at Lehman Brothers, with an Equal Weight rating at Morgan Stanley and with a Buy rating and $26 target at Deutsche Bank, which expects over 50% revenue growth from 2006-2009 due to the growth in the company's network processor product line.
TravelCenters of America was initiated with a Buy rating and $54 target at Ferris Baker Watts and with a Buy rating and $70 target at BWS Financial, as the firm is positive on TA's earnings power and valuation.
Citigroup initiated shares of MetroPCS with a Buy rating and $40 target. The firm believes the company's coupled with deepening penetration in its core markets should produce revenue and FCF growth that exceeds the maturing industry average.
Janco initiated shares of Foundry Networks Inc (NASDAQ: FDRY) with a Buy rating and $19.50 target, as the firm believes the company's new products put it in a position to gain market share.
CIBC World Markets initiated shares of Accuray Incorporated (NASDAQ: ARAY) with a Sector Underperformer rating and $19 target.
The Wall Street Journal reported that President Bush picked former advisor Robert Zoellick to take over the World Bank from Paul Wolfowitz; Mr. Zoellick, now a vice chairman at Goldman Sachs Group Inc (NYSE: GS), was a trade representative and deputy secretary of state.
The Institutional Shareholder Service has advised shareholders of medical device maker Biomet Inc (NASDAQ: BMET) to turn down a $10.9B private equity deal for the company, according to the Wall Street Journal.
Rather than focus on potential take-out targets, Barron's Online's "Weekday Trader" said that the smart bet for investors is to focus on companies with rising profits, cash flows and dividends, such as Loews Corp-Carolina Group (NYSE: CG) and Imperial Tobacco Group plc (NYSE: ITY), which boast free cash and dividends.
Stock futures dropped this morning indicating a possible lower start for U.S. stocks after Chinese stocks plunged 6.5% overnight.
Yesterday, stocks got a lift from M&A activity, but today, a sharp sell-off in Chinese stocks could take U.S. stocks down. Chinese stocks plunged after the government tripled the "stamp tax" on stock trades, trying to cool down the booming stock market. The Shanghai Composite Index tumbled 6.5% after hitting a record high on Tuesday. The Shenzhen Composite Index closed with a 7.2% loss. Economists say this shouldn't affect China economy as growth is mostly export driven.
Analysts have been expecting a correction in Chinese stocks due to the sharp price rise. Even Alan Greenspan quipped as much last week. European stocks fell the most in two months as fears this would spark yet another global sell-off similar to the one in late February. But the declines in global markets declined did not reach the same magnitude: The Nikkei 225 closed down 0.5% in Tokyo, the FTSE 100 declined 1.1% in London, Germany's DAX index was down 1.%, and France's CAC-40 was down 0.9%.
Today, investors will also pay attention to the Fed minutes release (at 2 p.m.) after it last kept rates unchanged, stating inflation remained a priority. The minutes could reveal more into policy makers future intention and investors will scrutinize the wording to see any implied intentions.
Oil prices rose today, ahead of U.S. inventory data (10 a.m.). While the report is expected to show an increase in crude and gasoline supplies, geopolitical concerns increased, especially worries about disruptions in Nigeria resurfaced.
MOST NOTEWORTHY: Amgen (AMGN), Wendy's (WEN), webMethods (WEBM), Global Crossing (GLBC) and International Securities Exchange (ISE) topped out today's noteworthy downgrades:
A host of companies shot down Amgen Inc (NASDAQ: AMGN) today:
Lazard cut the drugmaker to Sell from Buy while Citigroup cut them to Sell from Hold. JP Morgan and HSBC downgraded Amgen to Neutral from Overweight while Morgan Stanley cut shares to Equal-Weight from Overweight.
Elsewhere, Wendy's Int'l (NYSE: WEN) was downgraded by Citigroup to Hold from Buy on valuation.
Deutsche Bank cut shares of webMethods Inc (NASDAQ: WEBM) to Hold from Buy as they expect the software AG merger to go through.
Global Crossing (NASDAQ: GLBC) was downgraded to Hold from Buy at Deutsche Bank following the company's Q1 miss and revised guidance.
The International Securities Exchange (NYSE: ICE) was downgraded at Banc of America given potential risks to the Eurex bid. They are not counting on rival bids and recommend moving to the sidelines...
OTHER DOWNGRADES:
HSBC downgraded Rio Tinto (NYSE: RTP) to Neutral from Overweight.
Morgan Stanley downgraded King Pharma (NYSE: KG) to Equal Weight from Overweight. Pacific
It's interesting, but once again it seems bulls are knocking at the door. Yesterday's retreat, which I though would have continued at least for the morning until PPI numbers were released, is over for now. This morning, stock futures are indicating that markets will start on a positive note, at least for now, before the economic data is out.
Yesterday, the Dow Jones Industrial Average posted a triple-digit loss after retailers reported worse-than-expected sales declines in April. The S&P 500 and the Nasdaq Composite followed suit with even higher percentage drops.
Today, a slew of economic data the market has been expecting will be released.
At 8:30 a.m., April Producer Price Index is due to be reported. This measure of inflation at the wholesale level is expected to have increased 0.6% after a 1% increase in March. Core PPI, which excludes food and energy prices is estimated to have increased 0.2% after prices remained flat the month before. If PPI numbers will come higher-than-expected, markets could change direction as it would mean the Fed would continue to focus on inflationary pressure, perhaps at the expense of economic growth.
At the same time, April retail sales will also be released. Investors got a snapshot of this indicator yesterday, when individual retailers reported their own sales. This will give an overall indication of consumer spending. Retail sales are forecast to rise 0.4% in April after a rise of 0.7% in March. While higher gas prices may have clamped on consumer spending at stores, it may have also inflated the number of consumer spending.
Finally, at 10: a.m.m March business inventories are due.
The RBC Cash Index found that confidence was 87.1 in May, only slightly higher than April's reading of 85.4, a six-month low. Consumer confidence was essentially stuck as consumers worry about gasoline prices, which made them anxious about the economy's prospects and their own financial positions.
As if all this news and concern about economic activity wasn't enough, former Federal Reserve Chairman Alan Greenspan decided to weigh in with his own view, saying he still believed there was a one-third chance that the U.S. economy would slip into recession this year, reiterating a statement made in March. When Greenspan first said that, his comments may have helped fuel a market sell-off in February.
Overseas, Asian stocks closed mostly lower. European stocks continue their drop, heading for the biggest weekly decline in two months. International markets seem to have affected by the slowing U.S. economic growth that could affect companies' profits.
Corporate:
American International Group Inc. (NYSE: AIG) reported yesterday a first-quarter profit rise of 29%, but also disclosed for the first time it would take a pretax charge from its subprime loan exposure.
Alcatel-Lucent (NYSE: ALU) shares are up 2.5% in pre-market trading after the company reported a drop of 35% in profit but gave indication of a stronger first half and a 10% sequential Q2 growth.
Wendy's International Inc. (NYSE: WEN) institutional shareholders are urging the hamburger chain to sell itself to the highest bidder, according to the Wall Street Journal.
CBOT Holdings Inc. (NYSE: BOT), is weighing an unsolicited bid [subscription] from energy market ICE (NYSE: ICE) despite an earlier agreement to merge with the Chicago Mercantile Exchange (NYSE: CME), according to the Wall Street Journal.
MOST NOTEWORTHY: J.B. Hunt Transport Services, Inc (JBHT), Nvidia Corp (NVDA), International Flavors & Fragrances Inc (IFF), RealNetworks, Inc (RNWK) and Marchex (MCHX) were today's noteworthy upgrades:
Baird upgraded J.B. Hunt Transport Services Inc (NASDAQ: JBHT) to Outperform from Market Perform based on strong trends in Intermodel, valuation, and a $500M share buyback.
Pacific Growth upgraded shares of Nvidia Corp (NASDAQ: NVDA) to Buy from Neutral citing valuation.
Buckingham upgraded International Flavors (NYSE: IFF) to Accumulate from Neutral following the company's Q1 report.
RealNetworks Inc (NASDAQ: RNWK) was raised to Buy from Accumulate at ThinkEquity after its Q1 report.
Susquehanna upgraded Marchex Inc (NASDAQ: MCHX) to Positive from Neutral. Susquehanna has increased confidence that Marchex will be able to increase monetization via Yahoo!'s (YHOO) Panama upgrade, improving 2008 TAC rates and increased value of owned sites following a major upgrade for 2H07.
OTHER UPGRADES:
Jefferies raised Symantec Corp (NASDAQ: SYMC) shares to Buy from Hold with a $21 target.
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MOST NOTEWORTHY: BMC Software, Smart Modular and Entropic Comm were today's noteworthy initiations: 
Politicians this week have come up with a brilliant plan. Oh, let's blame the recent oil price hike on speculators, why don't we? This way, we can continue not doing anything about energy prices and oil's scarcity and still keep our jobs. Let's just deflect attention from us and our inaction and blame it all on those commodity traders.
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In this generally difficult market, there are still areas that are hot, and the energy futures market is one such area. One place that benefits from the solid business in futures trading is the exchange itself where such futures are traded. .gif){kind=logo}
I usually tend to favor the study and analysis of value-oriented professional portfolios over growth-oriented one. After the past week's volatility, however, I've seen many growth stocks begin to offer buying opportunities. 
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Stock futures dropped this morning indicating a possible lower start for U.S. stocks after Chinese stocks plunged 6.5% overnight.
It's interesting, but once again it seems bulls are knocking at the door. Yesterday's retreat, which I though would have continued at least for the morning until PPI numbers were released, is over for now. This morning, stock futures are indicating that markets will start on a positive note, at least for now, before the economic data is out.
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