MOST NOTEWORTHY: SuccessFactors, Taleo and Penn National were today's noteworthy initiations:
Oppenheimer initiated SuccessFactors Inc (NASDAQ: SFSF) with an Outperform rating and $15 target. The firm believes the company's double-digit revenue growth will continue as its differentiated HCM solutions gain broad-based adoption. Deutsche Bank believes the company has a strong opportunity to build a highly profitable business as it broadens its footprint, and started shares with a Buy rating and $15 target.
Deutsche Bank also reinstated coverage of Taleo Corporation (NASDAQ: TLEO) with a Buy rating and $35 target. The firm believes the Vurv acquisition will create significant accretion in 2009 and that investors should take advantage of the recent share weakness.
Oppenheimer assumed coverage of Penn National Gaming Inc (NASDAQ: PENN) with an Outperform rating and believes the termination of Penn's acquisition by Fortress Investment and Centerbridge will be catalysts for the stock, as they think it provides the company with financial flexibility. In addition, the firm believes Penn's management team has historically made prudent capital decisions.
Once thought to be extremely safe, action rate securities have proved difficult to sell in this credit crisis. Tech companies are big holders of them and are taking charges left and right, including MetroPCS Communications Inc (NYSE: PCS), Palm Inc (NASDAQ: PALM) and Earthlink Inc (NASDAQ: ELNK), according to the Wall Street Journal.
NYSE Euronext Inc (NYSE: NYX) will look to increase its stakes in India's National Stock Exchange and the country's Multi Commodity Exchange, the Business Standard reported, once foreign ownership rules are eased. NYSE Euronext also intends to partner with the two Indian exchanges in order to help them develop their business.
WEB SITES:
Business Week reported that Brian Marckx of Zacks Investment Research said Bristol Myers Squibb Company (NYSE: BMY) may be an attractive takeover candidate for a larger pharma such as Pfizer Inc (NYSE: PFE) or France's Sanofi-Aventis SA (NYSE: SNY), both of which have been partners with Bristol on some of its products.
MOST NOTEWORTHY: Sanofi-Aventis (SNY), Dell (DELL), Warner Music Group (WMG), KeyCorp (KEY) and SanDisk Corp (SNDK) were today's noteworthy upgrades:
HSBC upgraded shares of Sanofi-Aventis (NYSE: SNY) to Overweight from Neutral to reflect the company's new drug pipeline investments.
ThinkEquity raised Dell (NASDAQ: DELL) to buy from Sell based on expectations for a better-than-expected July quarter due to strong consumer business demand.
Pali Research upgraded Warner Music Group (NYSE: WMG) to Neutral from Sell on valuation with the stock down 40% year-to-date.
Merrill upgraded KeyCorp (NYSE: KEY) to Neutral from Sell following better-than-expected Q2 results.
JP Morgan upgraded SanDisk (NASDAQ: SNDK) to Overweight from Neutral citing increased demand for NAND applications and supply constraints...
OTHER UPGRADES:
Bernstein upgraded Campbell Soup (NYSE: CPB) to Outperform from Market Perform.
Boston Properties (NYSE: BXP) was raised to Hold from Underweight at Keefe Bruyette.
Matrix upgraded Acuity Brands (NYSE: AYI) to Strong Buy from Buy.
Bernstein raised Regions Financial (NYSE: RF) to Market Perform from Underperform.
A press release [PDF] out this morning confirmed positive Phase III results of Novo Nordisk's (NYSE: NVO) potential blockbuster drug, Liraglutide, which is an analogue of the naturally-occurring hormone GLP-1 in development by Novo for the treatment of type 2 diabetes. The clinical results of the first of five late-stage studies showed that Liraglutide provided significantly better glucose control and led to significantly more weight loss than patients who used Sanofi-Aventis SA's (NYSE: SNY) Lantus.
Novo CEO Lars Rebien Sorensen said the company is looking to apply for regulatory approval of the drug in the U.S. and Europe in the middle of next year, and hopes to receive approval by mid-2009.
This data is excellent news for Novo, who has been trying to gain market share against competitors for some time in the attractive U.S. diabetes market. Unfortunately, the data is also a negative for rivals Amylin Pharmaceuticals Inc (NASDAQ: AMLN), Eli Lilly and Company (NYSE: LLY) and Pfizer Inc (NYSE: PFE), who all have diabetes drugs on the market - Byetta and the inhalable insulin Exubera, respectively.
Shares of Novo were up nearly 4.5% this morning on the Liraglutide data, which some analysts called "a positive surprise."
MOST NOTEWORTHY: Sanofi-Aventis (SNY), Dow Jones & Co (DJ) and AutoDesk, Inc (ADSK) were today's more notable downgrades:
Sanofi-Aventis (NYSE: SNY) was downloaded from a multitude of companies after a U.S. FDA panel rejected the company's Zimulti weight-loss pill because the medicine was linked to suicides:
To Hold from Buy at Societe Generale
To Neutral from Outperform at BNP Paribas
To Neutral from Overweight at JP Morgan and HSBC
To Neutral from Buy at Merrill Lynch
To Sell from Hold at ABN Amro
Elsewhere, UBS cut Dow Jones & Co Inc (NYSE: DJ) to Reduce from Neutral as they believe there is no guarantee the controlling Bancroft family will accept News Corp's (NYSE: NWS) offer; they think another bid is unlikely given NWS's aggressive bid and cautions that shares could drop back to mid $30 range if the bid is not accepted.
Autodesk Inc (NASDAQ: ADSK) was downgraded to Neutral from Buy at Goldman on valuation.
The highlight of the week, where all eyes will be focused (at least in the tech world), is the Apple Worldwide Developers Conference, which is all week long.
Monday June 11
Apple Inc (NASDAQ: AAPL) Worldwide Developers Conference to be held from June 11 through June 15.
The Wall Street Journal reported that Time Warner Inc's (NYSE: TWX) Time Inc. has sold its interest in Bookspan, a book club, to Bertelsmann for about $150M.
According to the Financial Times, citing sources, Imperial Tobacco Group plc (NYSE: ITY) raised its bid for French and Spanish tobacco company Altadis SA to EUR47 per share from a previous bid of EUR45 per share. Bloomberg reported that Altadis rejected the sweetened takeover bid.
OTHER PAPERS:
The Telegraph reported that Dow Jones and Company Inc (NYSE: DJ), the publisher of the Wall Street Journal, is understood to be in advanced talks to buy the London-based Financial News newspaper for about GBP27M, with a deal possibly being announced within days.
The Wall Street Journal's (subscription required) "Heard on the Street" column suggested that Deere and Company (NYSE: DE), which has risen 40% since lsat September, may be about to level off as analysts believe the positive outlook is already baked in to the stock price.
The Wall Street Journal reported that Sanofi-Aventis ADS's (NYSE: SNY) Acomplia, a "miracle weight loss pill", is looking less like a miracle among repeated FDA delays and European restrictions.
Barclays plc ADS (NYSE: BCS) says it would walk away rather than overpay for ABN Amro Holdings (NYSE: ABN), and rejected suggestions that it might then be vulnerable to a takeover itself, according to the Financial Times (subscription required).
The Financial Times reported that Sony Corporation's (NYSE: SNE) PlayStation 3 video game console has had a record-breaking launch in Europe, selling about 600,000 consoles in its first two days.
The Financial Times reported that U.S. drugmaker Merck & Company Inc (NYSE: MRK) won a restatement of its patent for once-weekly Fosamax treatment from the European Patent Office.
The Financial Times interviewed Barry Diller, the CEO of InterActiveCorp (NASDAQ: IACI), who believes corporate governance may be pushing U.S. companies to go private.
OTHER PAPERS:
The New York Times reported that billionaires Eli Broad and Ronald Burkle may be back in the running to buy The Tribune Company (NYSE: TRB), which has responded to a request for additional financial information about the company from the pair.
The Economic Times reported that Indian telecom operator Hutchison Essar is looking at outsourcing its IT operations to International Business Machines Corporation (NYSE: IBM), in a deal that would be worth $1.4B to $1.6B, according to sources.
According to Saudi Arabian Oil Minister Ali Naimi, the world oil market is in "much, much better health and balance" now and, if trends hold, there will be no need for further production cuts or increases in supply when members of the Organization of Petroleum Exporting Countries meet next month.
The Financial Times (subscription required) reported that MasterCard Inc (NYSE: MA) is expected to announce a pilot program with the GSM Association that will allow migrant workers to use cellphones for international money transfers.
The Deutschland edition of the Financial Times reported that Private Equity is looking at Infineon Technologies ADS (NYSE: IFX).
OTHER PAPERS:
According to the U.K. Times, Sanofi-Aventis ADS (NYSE: SNY) has called off talks with Bristol-Myers Squibb Company (NYSE: BMY) over a potential deal.
The Washington Post reported that thousands of Army Humvees are lacking the Frag Kit 15 armor upgrade, which is not anticipated to be completed until this summer.
Investor's Business Daily's"The New America" column highlighted Web conferencing leader WebEx Communications Inc (NASDAQ: WEBX).
MOST NOTEWORTHY: The Major European Pharmaceutical Sector was the most notable downgrade this morning.
Lehman Bros. downgraded the Major European Pharmaceutical Sector based on its 2007 outlook.
The firm downgraded Sanofi-Aventis ADS (NYSE: SNY) and Glaxosmithkline plc ADS (NYSE: GSK) to Equal Weight from Overweight.
OTHER DOWNGRADES:
Deutsche Bank is cautious on British Airways' ADS (NYSE: BAB) 2007 outlook and downgraded the airliner to Sell from Hold, citing valuation.
Goldman Sachs downgraded Hornbeck Offshore Svc (NYSE: HOS) to Sell from Neutral following the driller's disappointing fourth quarter outlook.
Wachovia downgraded CACI Int'l (NYSE: CAI) to Market Perform from Outperform following the sudden announcement last night that CFO Waechter has resigned from the company.
I met recently in New York with the managers of the Quaker Capital Opportunity Fund (QUKTX). The large-cap fund hasn't hit it out of the park the past few years -- its returns are flat so far in 2006 and the fund slightly underperformed the S&P 500 in 2004 and 2005, gaining 16.3% and 9.2% respectively, according to Morningstar.
But fund managers Michael Barron and Charlie Knott have had the fund positioned defensively, given their concerns about the slowing economy and rising interest rates.
I asked them which stocks they like the best right now and was impressed with their picks. The list is made up of solid companies in the food, beverage, consumer staples and drug sectors. A couple are foreign-based firms, which could help cushion them from U.S. turmoil. If, like Barron and Knott, you want to stay in the market but your main goal is preserving your capital, these are six stocks to consider:
PepsiCo Inc. (NYSE: PEP). Recent earnings news has been good and the stock has climbed from $58 to $63.50 in the past three months.
Colgate-Palmolive (NYSE: CL). The stock is up nicely this year, but fell a couple of dollars recently as second-quarter earnings dropped from a year ago due to restructuring charges. Sounds like a near-term opportunity.
Staples Inc. (NASDAQ: SPLS). This stock hit hard times in May, but analysts are positive on it.
Diageo PLC ADS (NYSE: DEO). This liquor maker has done decently all year, but had a nice pop in just the past week.
Sanofi-Aventis ADS (NYSE: SNY). This large drug company has been very volatile this year (this is the riskiest of the bunch, I'd say). But its treatment to battle obesity has huge promise. It reports earnings on Aug. 2 and analysts expect it to earn 78 cents a share.
Cephalon Inc. (NASDAQ: CEPH). Another biotech, this one has drugs for sleep disorders, cancer and pain. It's down year-to-date, but up nicely since late June.
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MOST NOTEWORTHY: SuccessFactors, Taleo and Penn National were today's noteworthy initiations:.gif){kind=logo}
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