U.S. stock futures were higher Friday morning, indicating stock markets could possibly extend Thursday's rally as the dollar rose and oil prices fell further. The dollar continues to make gains on the back of growing evidence of global economic softness. Still, several economic readings are due out today, including the New York Empire State manufacturing index , capacity utilization and industrial production -- all before the opening bell.
Kohl's Corp shares could start higher as premarket indication has them trading 2.3% higher, while Nordstrom's are trading 4% lower in premarket action. Kohl's quarterly profit fell 12% from a year ago, but the retailer lifted its fiscal year profit forecast. Meanwhile, upper scale Nordstrom, reported a 21% drop in second-quarter profits and cut full year outlook.
ANF said second-quarter profit fell on lower sales of jeans and T-shirts and forecast full-year earnings per share that trailed some analysts' estimates. JCP also saw profit decline but beat estimates and issued lower guidance.
Autodesk (NASDAQ: ADSK) shares are trading 10% higher in premarket action after the design software maker reported stronger-than-forecast second-quarter earnings Thursday after the close.
Autodesk Inc. (NASDAQ: ADSK), a leader of 2D and 3D design software, is at $40.48. ADSK is scheduled to report Q1 EPS on May 15. Goldman Sachs says, "we think it is less likely that shares will rise on earnings."
ADKS May 40 straddle is priced at $2.15, June 40 is at $4.05. ADSK June option implied volatility of 40 is near its 26-week average of 38 according to Track Data, suggesting non-directional price movement after EPS.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
MOST NOTEWORTHY: Golar LNG, Yingli Green Energy and Bill Barrett were today's noteworthy downgrades:
Jefferies downgraded shares of Golar LNG (NASDAQ: GLNG) to Hold from Buy on valuation, as they see limited upside over the next 12 months.
Banc of America downgraded shares of Yingli Green Energy (NYSE: YGE) to Neutral from Buy on difficult fundamentals, as they believe solar industry gross margins will continue to contract due to silicon competition and decelerating demand in Spain and Germany.
SunTrust lowered Bill Barrett Corporation (NYSE: BBG) to Neutral from Buy based on valuation and lack of near-term exploration catalysts.
OTHER DOWNGRADES:
Autodesk (NASDAQ: ADSK) was lowered to Accumulate from Buy at ThinkEquity.
Goldman removed Oneok (NYSE: OKE) from its Conviction Buy List.
MOST NOTEWORTHY: International Paper, Autodesk, Oracle and Vistaprint were today's noteworthy upgrades:
Citigroup upgraded shares of International Paper (NYSE: IP) to Buy from Hold on valuation and their belief that recent declines in the dollar will support pulp, paper and paperboard prices going forward.
Autodesk (NASDAQ: ADSK) was upgraded to Buy from Hold at Jefferies after their proprietary survey yielded positive data points going into Q3. They also raised their estimates due to currency. Broadpoint raised its rating on Oracle to Buy from Neutral on valuation following the recent underperformance.
Oracle (NASDAQ: ORCL) was also upgraded to Sector Outperformer from Sector Performer at CIBC, as they believe the company's growing product portfolio, improving margins and successful acquisition strategy should continue to drive double-digit EPS gains.
William Blair added Vistaprint (NASDAQ: VPRT) to its Current Better Values List. The firm believes the company has a large market opportunity and expects its business momentum to continue. They view the recent weakness as a buying opportunity.
OTHER UPGRADES:
Merrill Lynch upgraded Alcatel-Lucent (NYSE: ALU) to Neutral from Sell.
MOST NOTEWORTHY: The software sector, Ericsson, Paccar, Eni SpA and Valueclick were today's noteworthy downgrades:
Bear Stearns downgraded the software sector to Underweight from Market Weight, citing valuations and increased risk to 2008 IT budgets.
Ericsson (NASDAQ: ERIC) was downgraded to Equal Weight from Overweight at Lehman and to Neutral from Overweight at JP Morgan following the company's Q3 profit warning.
Paccar (NASDAQ: PCAR) was downgraded to Underperform from Market Perform at Wachovia. The firm believes Street estimates are too high due to weaker-than-expected North American unit production.
ABN Amro downgraded shares of Eni SpA (NYSE: E) to Sell from Hold as they expect the company to invest significantly more in its upstream activities than guidance suggests due to cost pressures.
Oppenheimer downgraded ValueClick (NASDAQ: VCLK) to Neutral from Buy following the Q3 pre-announcement and guidance.
MOST NOTEWORTHY: Getty Images (GYI), Jackson Hewitt (JTX), Electronic Data (EDS), RC2 Corp (RCRC) and Chipotle Mexican Grill (CMG) were today's noteworthy downgrades:
Deutsche Bank cut Getty Images (NYSE: GYI) to Sell from Hold citing deterioration in its core business. Gabelli downgraded Getty Images to Hold from Buy after the company lowered guidance to reflect the changing industry dynamics.
Goldman cut Jackson Hewitt (NYSE: JTX) to Sell from Neutral citing near-term risks that include the renegotiation of the HSBC (HBC)/RAL contract, the DoJ/IRS investigation, and decreasing performance in tax.
Jefferies downgraded Electronic Data Systems (NYSE: EDS) to Hold from Buy to reflect the company's slowing cash flow improvement.
Wedbush downgraded RC2 Corp (NASDAQ: RCRC) to Buy from Strong Buy on the lower sales forecast for 2007. Soleil cut shares to Hold from Gradually Accumulate to reflect uncertainty over the Thomas recall and increased competition.
Chipotle Mexican Grill (NYSE: CMG) was downgraded to Market Perform from Outperform based on valuation...
OTHER DOWNGRADES:
Lazard downgraded Kyphon (NASDAQ: KYPH) to Hold from Buy.
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.
MOST NOTEWORTHY: Tenet Healthcare Corp (THC), Furniture Brands International, Inc (FBN), Sepracor Inc (SEPR), ValueClick, Inc (VCLK) and Altria Group, Inc (MO) were today's noteworthy downgrades:
Bear Stearns downgraded shares of Tenet Healthcare (NYSE: THC) to Underperform from Peer Peform citing difficulties in California and weak margins.
Stifel downgraded Furniture Brands (NYSE: FBN) to Sell from Hold citing concerns regarding continued weakness in the housing industry.
Summer Street downgraded Sepracor (NASDAQ: SEPR) to Sell from Neutral after the HCPCS website indicated Xopenex and Albuterol will have the same code as of July 1.The firm believes this eliminates the optimistic scenarios that Sepracor can garner a minimal-or-no-reimbursement cut.
RBC downgraded shares of ValueClick (NASDAQ: VCLK) to Underperform from Sector Perform as the firm believes the FTC letter poses a risk to earnings and that the company is unlikely to be acquired.
Matrix downgraded Altria Group (NYSE: MO) to Buy from Strong Buy to reflect decreasing cigarette sales and increasing valuation...
OTHER DOWNGRADES:
American Technology cut Autodesk, Inc (NASDAQ: ADSK) to Neutral from Buy.
Matrix downgraded Fluor Corp (NYSE: FLR) to Sell from Buy.
MOST NOTEWORTHY: Delta Air Lines (DAL), Diana Shipping Inc (DSX), Adobe Systems Inc (ADBE), Eagle Materials, Inc (EXP), ACR Group (BRR) and Autodesk, Inc (ADSK) were today's noteworthy initiations:
Goldman is positive on Delta Air Lines (NYSE: DAL), starting shares with a Buy rating and $25 target based on above average growth, best-in-class unit costs, free cash flow and less labor cost risk.
Diana Shipping (NYSE: DSX) was started at JP Morgan with an Overweight rating based on valuation and positioning. Lazard started Diana with a Buy rating, expecting demand for dry bulk shipping will outperform supply through 2010.
Soleil expects Adobe Systems (NASDAQ: ADBE) recently released Creative Suite 3 to be the near-and-medium term growth driver and started shares with a Buy rating.
JP Morgan started Eagle Materials Inc (NYSE: EXP) with an Underweight rating, expecting a decline in wallboard industry profitability due to increased capacity and lower demand.
B. Riley started ACR Group (AMEX: BRR) with a Buy rating calling the stock "cheap."
Soleil believes a catch up on the Autodesk's (NASDAQ: ADSK) SEC filings and a strong Q1 will prove near-term catalysts and started shares off with a Buy rating and $56 target.
MOST NOTEWORTHY: Odyssey Re Holdings Corp (ORH) was today's only notable initiation:
Shares of the reinsurance underwriter Odyssey Re Holdings Corp (NYSE: ORH) was initiated at Citigroup with a Sell rating and $39 target, citing high valuation, the impact from past legacy underwriting business and risk of further SEC investigation related to majority shareholder Fairfax Financial Holdings Ltd (FFH).
OTHER INITIATIONS:
UBS started PetSmart inc (NASDAQ: PETM) with a Neutral rating and $35 target.
Bear Stearns initiated Autodesk inc (NASDAQ: ADSK) with a Peer Perform rating.
B. Riley started Design Within Reach Inc (NASDAQ: DWRI) with a Buy rating and $10 target.
Goldman Sachs resumed coverage of AXA Financial ADS (NYSE: AXA) with a Buy rating.
Credit Suisse started CB Richard Ellis Group Inc (NYSE: CBG) with an Outperform rating and $44 target.
MOST NOTEWORTHY: Specific restaurants and Autodesk (ADSK) top today's list of initiations.
Robert W. Baird initiated coverage of Starbucks Corp. (NASDAQ:SBUX), Panera Bread Co. (NASDAQ:PNRA), Chipotle Mexican Grill, Inc. (NYSE:CMG) and Texas Roadhouse, Inc. (NASDAQ:TXRH) with Outperform ratings and P. F. Chang's China Bistro Inc (NASDAQ:PFCB) and Rare Hospitality International, Inc. (NASDAQ:RARE) with Neutral ratings.
American Tech initiated Autodesk , Inc. (NASDAQ:ADSK) with a Buy rating and $12 target. The firm expects to see meaningful upside to 2008 consensus estimates and recommends investors to buy the stock on any pullback following Thursday's results.
OTHER INITIATIONS:
Soleil initiated Openwave Systems, Inc. (NASDAQ:OPWV) with a Hold rating, citing unlikely outperformance due to their maturing product line and consolidating customer base.
The Bank of America initiated F5 Networks, Inc. (NASDAQ:FFIV) with a Buy and $90 target. The firm said checks in the enterprise segment have been positive. In addition, Soleil said the company will soon enter a major product cycle with four launches.
U.S. stock futures were higher Friday morning, indicating stock markets could possibly extend Thursday's rally as the dollar rose and oil prices fell further. The dollar continues to make gains on the back of growing evidence of global economic softness. Still, several economic readings are due out today, including the New York Empire State manufacturing index , capacity utilization and industrial production -- all before the opening bell.
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