Oppenheimer upgraded Genzyme (NASDAQ: GENZ) to Outperform from Perform on expectations that upcoming regulatory events, mainly approvals of Mozobil and 2,000L Myozyme, will serve as positive catalysts.
Ladenburg analyst Dick Bove raised Bank of New York (NYSE: BK) to Buy from Neutral as he now believes the Russian lawsuit is turning in the bank's favor and is no longer a significant risk.
Societe Generale upgraded UBS (NYSE: UBS) to Buy from Hold on valuation and the company's deal with the Swiss government.
Bed Bath & Beyond (NASDAQ :BBBY) was upgraded to Market Perform from Underperform at Friedman Billings.
RC2 Corp (NASDAQ: RCRC) was lifted at Wachovia to Outperform from Market Perform.
Cintas (NASDAQ: CTAS) was upgraded to Hold from Sell at Citigroup.
General Motors Corp. (NYSE: GM), Ford Motor Co. (NYSE: F) and Chrysler appealed to Congress for a bailout Tuesday. GM said it wouldn't last till New Year's without an immediate $4 billion and is asking for as much as $18 billion to keep afloat and survive. Together they asked for $34 billion. Meanwhile, November auto sales plunged 37% with Ford's U.S. sales declining 31%, GM's falling 41% and Chrysler LLC's dropping 47%. Overseas rivals didn't do better. GM shares traded 5.2% lower and F's 1.9% higher in pre-market (7:51 and 7:55 am respectively).
Research In Motion Ltd. (NASDAQ: RIMM)lowered its financial earnings per share, revenue and new subscriber accounts guidance for its third-quarter, saying it has added fewer new subscribers than expected as the economy slowed. This news will likely have an effect on Apple Inc. (NASDAQ: AAPL) as well. RIMM shares already hit a low Tuesday following an estimate cut from JPMorgan. RIMM shares traded 5.6% lower in premarket action (7:58 am). AAPL shares were down 2% in premarket trade (8:09 am).
Bank of America (NYSE: BAC) could end up cutting 30,000 jobs as it absorbs Merrill Lynch (NYSE: MER), three times as many as previously estimated, sources told CNBC, as BAC's CEO is trying to increase cost cuts. The majority of the layoffs are likely to come from Merrill's side of the business. BAC shares were 3% lower in premarket trade (7:59 am).
Constellation Energy Group Inc. (NYSE: CEG) finds itself in the midst of a bidding war as Electricite de France SA, the world's biggest operator of atomic reactors and which owns 9.5%, offered to pay $4.5 billion for half of CEG's nuclear business to expand in the U.S. CEG agreed earlier this year to be bought by Warren Buffett's Berkshire Hathaway Inc.'s MidAmerican Energy Holdings Co. for $4.7 billion. CEG shares gained over 25% in premarket trading (8:00 am).
Goldman upgraded Bed Bath & Beyond (NASDAQ: BBBY) to Buy from Neutral based on valuation and a potential margin rebound at Linens N' Things.
Citigroup upgraded Rockwell Automation Inc. (NYSE: ROK) to Hold from Sell on valuation and believes expectations have been reset to a reasonable level. The company's target was lowered to $27 from $33.
Friedman Billings upgraded shares of Ceradyne (NASDAQ: CRDN) to Outperform from Market Perform on valuation following the recent weakness and thinks the Army will move forward with a larger XSAPI procurement in FY09. The firm raised their target to $30 from $26.
Goldman added Wyeth (NYSE: WYE) to the Conviction Buy List.
Best Buy Inc. (NYSE: BBY) shares are down after the company said it sees softer consumer spending and lowered fiscal 2009 EPS guidance.
American Express Co. (NYSE: AXP) -- The Wall Street Journal reported that according to its sources, AmEx is seeking about $3.5 billion from the U.S. government to help boost its balance sheet. This follows Monday's Federal approval for AmEx to become a bank holding company.
General Motors Corp. (NYSE: GM) -- House Speaker Nancy Pelosi thinks GM is too big to fail and wants Congress to support a financial assistance for the troubled U.S. auto industry. This follows Obama urging Bush to support aid for struggling automakers and Democrats in Congress passing legislation that would give GM, Ford Motor Co. (NYSE: F) and Chrysler access to $25 billion in government-backed loans. But automakers need more. GM shares are trading higher.
Prudential Financial Inc. (NYSE: PRU) said late Tuesday it will pay a dividend of 58 cents per share on Dec. 19 to shareholders of record at the close of business on Nov. 24. This 2008 annual dividend is roughly half of the $1.15 per share it paid out to shareholders last year.
Ever read an earnings report and say to yourself, "man, there's just nothing going on here?" I did exactly that Wednesday with Bed Bath & Beyond (NASDAQ: BBBY) and its second-quarter report.
To be fair, something is going on with the retailer. Earnings per diluted share decreased 16% to 46 cents. And net cash from operating activities took a big 40% dive, coming in at $168 million. So, yes, something is going on, it just isn't anything good.
And if you think those stats are bad, consider that same-store sales for the quarter went down by 0.1%. Okay, is it really fair to point out that comps declined by 0.1%? Shouldn't I have just said "flat" instead? I mean, it's almost like rubbing the depressing results in the face of management by literally writing the exact percentage that comps declined at when said percentage is so unequivocally small. Hey, maybe management needs a reminder that, in the year-ago quarter, comps were actually up to the tune of 2.2%. What happened?
Well, I will cut some slack here since we are in the grips of an economic mess and I certainly would assume that all the problems in the housing industry are taking their noxious toll on the retailer. I'm not sure consumers are in the mood to buy a lot of bathroom accessories while Congress is trying to figure out how to keep the financial matrix from imploding.
U.S. stock futures were higher earlier this morning, as investor continued to watch the debate over the $700 billion bailout plan following President Bush's speech Wednesday when he warned "Our entire economy is in danger." But then General Electric cut its earnings estimates and futures began coming off highs. Now it seems stocks could start the day mixed. Also on tap today are data on durable-goods orders and new-home sales for August, as well as the weekly initial jobless claims number.
General Electric Co. (NYSE: GE) has lowered its outlook for third-quarter and full-year earnings, citing "unprecedented weakness and volatility in the financial services markets." The new guidance is far below analyst estimates. GE has also reaffirmed its commitment to maintaining a 'AAA' credit rating, and is taking steps to bolster its capital and liquidity position including suspending the current GE stock buyback, but not touching the dividend. GE shares are down nearly 5% in pre-market trading.
Delta (NYSE: DAL) and Northwest (NYSE: NWA) shareholders are to vote Thursday on the proposed deal to combine the two. The votes are expected to overwhelmingly back the deal. With that, the airlines will then need
to pass two more hurdles: U.S. regulatory approval and a pending federal lawsuit seeking to block the deal after which the two would become the world's biggest carrier. Shares of both are indicating higher.
U.S. stock futures are (finally) higher this morning, reacting to Warren Buffett's investment in Goldman Sachs as a vote of confidence in (what's remaining of )the financial markets. Later this morning, August existing home sales is due out, and it isn't expected to show any recovery or bottom. As a catalyst to this crisis, much worse-than-expected data may cause further market declines. For now, though, it looks like stocks would start on a positive note. Goldman Sachs Group Inc. (NYSE: GS) -- Billioner investor Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A) said Tuesday it is investing at least $5 billion in Goldman. The AP reports that "In addition to buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering." Seems Japanese bank Sumitomo Mitsui Financial may also invest between 100 billion and 300 billion yen in Goldman. GS stock is up over 4.5% in pre-market trading. The news gave a boost to Morgan Stanley (NYSE: MS) as well and its stock is also up about 4% in pre-market. American International Group Inc. (NYSE: AIG), Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) -- The FBI is investigating these financial institutions for potential fraud. Lehman Brothers Holdings Inc. (OTC: LHEMQ) also is under investigation. The news doesn't seem to affect shares of these companies, though, as AIG stock is up over 3% in pre-market trading, while FNM and FRE shares up over 10%. AIG also took the $85 billion loan from the N.Y. Fed.
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.
Merrill upgraded shares of AstraZeneca (NYSE: AZN) to Neutral from Underperform to reflect the company's pipeline momentum and lack of negative catalysts.
Keefe Bruyette upgraded Deutsche Bank (NYSE: DB) to Outperform from Market Perform on valuation as they believe DB should trade at a higher multiple.
Merrill cut Novo Nordisk (NYSE: NVO) to Underperform from Neutral as the firm sees better opportunities elsewhere in the sector.
Merriman downgraded Rackable Systems (NASDAQ: RACK) to Neutral from Buy following the company's mixed Q2 results to reflect its customer concentration and fluctuating margins.
Janus Capital (NYSE: JNS) was downgraded at JP Morgan to Underweight from Neutral.
Fortress (NYSE: FIG) was cut to Sell from Hold at Citigroup.
Analyst initiations:
UBS believes Apple (NASDAQ: AAPL) has a competitive advantage and their checks indicate new Macs, new iPhone colors and potentially new iPods may come early on in the second half of 2008. The firm initiated shares with a Buy rating and $195 target. UBS also initiated Dell Inc. (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) at Neutral.
KeyBanc initiated Bed Bath & Beyond (NASDAQ: BBBY) with an Underweight rating and $25 target based on slowing core growth at Bed Bath and likely margin erosion from the ramp in growth at Christmas Tree Shops and buybuy Baby.
Infineon (NYSE: IFX) was initiated with a Buy rating at Deutsche Bank.
After hitting a one-year high of $37.61 last June, the stock hit a one-year low of $24.49 in January. BBBY opened this morning at $29.98. So far today the stock has hit a low of $29.72 and a high of $30.54. As of 12:05, BBBY is trading at $30.28, up $1.70 (6.0%). The chart for BBBY looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $25 range. A bull-put credit spread is an options position that combines the purchase and sale of put 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 a 4.2% return in just seven weeks as long as BBBY is above $25 at August expiration. Bed, Bath & Beyond would have to fall by more than 17% before we would start to lose money. Learn more about this type of trade here.
Bed Bath & Beyond (NASDAQ: BBBY) reported Q1 earnings on Wednesday, and Trey Thoelcke highlighted the numbers in this earnings-recap piece. Shares rose substantially in the after-hours trading session yesterday, jumping over 8%, and as I reviewed various earnings reports last night, I found myself drawn to the retailer's stock performance. I haven't been a huge fan of Bed Bath & Beyond as of late, so I figured I should take a look at the earnings release to see if there's anything here that would change my opinion.
Unfortunately, there isn't. Sales may have grown 6%, and expectations may have been beaten by $0.03, but net income still dropped over 20% to $0.30 per diluted share. Cash flow from operations declined 44% to $65.8 million. And same-store sales were very anemic, rising only 0.8%.
I choose, in this case, to focus on those figures. I also consider the fact that Bed Bath & Beyond does not pay a dividend, and that we are in an awful economic environment, both from a consumer and stock-market standpoint. This is not the stock I'd want to face the recession with, and I don't necessarily find it to be a big value right now. When it comes to retail, I am more likely to look at Wal-Mart (NYSE: WMT) and Target (NYSE: TGT). I'd even consider a Home Depot (NYSE: HD) or a Lowe's (NYSE: LOW). All of these stocks pay dividends and have better brand equities and more attractive prospects. Bed Bath & Beyond certainly didn't deliver an earnings bomb, but I'm still not inclined to put money here.
Disclosure: I don't own any company mentioned; positions can change at any time.
Here's a quick recap of some additional earnings reports on Wednesday.
Beaverton, Ore.-based Nike Inc. (NYSE: NKE) said strong growth overseas helped boost its fourth-quarter profit by 12% to $490.5 million, or 98 cents per share. Analysts polled by Thomson Financial expected the company to earn 96 cents per share for the quarter. Shares fell more than 5% in after-hours trading to $62.15.
CKE Restaurants Inc. (NYSE: CKR) said its first-quarter profit climbed 8% to $16.6 million, or 31 cents per share, helped by a small increase in same-store sales at Carl's Jr. restaurants. Revenue fell 3% to $466.2 million. Analysts polled by Thomson Financial expected profit of 27 cents per share on revenue of $465.5 million. Shares fell 5 cents to $12.25 in after-hours trading.
Red Hat Inc. (NYSE: RHT) said its fiscal first-quarter profit rose 6.6% to $17.3 million, or 8 cents per share. Adjusted earnings were 18 cents per share. Revenue rose 32% to $156.6 million. Analysts polled by Thomson Financial on average predicted a profit of 18 cents per share on revenue of $153 million. Shares fell 19 cents in after-hours trading to $22.11.
General Mills Inc. (NYSE: GIS) said its fourth-quarter profit dropped 17% to $185.2 million, or 53 cents per share. Adjusted earnings were 73 cents per share, which met Wall Street expectations. Sales increased 13% to $3.47 billion beating expectations. The company reaffirmed its guidance for the full year. Shares fell almost 2% to $61.19.
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Analyst upgrades:
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U.S. stock futures were higher earlier this morning, as investor continued to watch the debate over the $700 billion bailout plan following 
U.S. stock futures are (finally) higher this morning, reacting to Warren Buffett's investment in Goldman Sachs as a vote of confidence in (what's remaining of )the financial markets. Later this morning, August existing home sales is due out, and it isn't expected to show any recovery or bottom. As a catalyst to this crisis, much worse-than-expected data may cause further market declines. For now, though, it looks like stocks would start on a positive note.
Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders .gif){kind=logo}
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