Oil was again the headline event today with the price per barrel near $142.00 and talk of $150.00 sooner rather than later. But all in all this day was far "less bad" than it could have been, especially if you consider the selloff yesterday, and consider that this was a Friday ahead of a shortened work week where traders are leery of holding positions. To top it off, the June quarter ends on this coming Monday.
The University of Michigan posted consumer confidence today at a 28-year low as inflationary pressures and fears remain high. The final June reading fell down to 56.4 from 59.8 in May and down from the prior June preliminary release of 56.7.
MOST NOTEWORTHY: Micron, China Sunergy and Medtronic were today's noteworthy upgrades:
Deutsche Bank upgraded shares of Micron (NYSE: MU) to Buy from Hold as they believe improved pricing and the company's cost reductions should drive a strong margin recovery. The firm raised MU's target to $11 from $7.
Jefferies raised China Sunergy (NASDAQ: CSUN) to Hold from Underperform following the company's Q1 beat to reflect its improved outlook for the production of higher efficiency cells and better controls over cash flow measures.
Goldman raised Medtronic (NYSE: MDT) to Buy from Neutral based on potential earnings upside from strong market share and broad distribution.
Moody's downgraded the debt of Washinton Mutual (NYSE:WM) to A2, according toBriefing.com. The news service also reports that Citigroup downgraded Intuit (NASDAQ:INTU) to "hold" from "buy".
Deutsche Bank has upgraded Micron (NYSE:MU) to "buy" from "hold", according toMarketWatch.
Thomas Weisel Partners reiterated its "outperform" rating on CVS Caremark (NYSE:CVS) ahead of the company's analyst meeting, according to the AP.
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: Lululemon, National City and Devon Energy were today's noteworthy upgrades:
Thomas Weisel upgraded shares of Lululemon (NASDAQ:LULU) to Overweight from Market Weight as they believe the company's momentum continues following the strong results; the firm maintains a $43 target on shares.
Bear upgraded National City (NYSE:NCC) to Outperform from Underperform citing favorable risk/reward following reports is is considering a transaction with KeyCorp (NYSE:KEY).
JP Morgan raised Devon Energy (NYSE:DVN) to Overweight from Neutral citing solid organic growth with high rates of returns.
OTHER UPGRADES:
Micron (NYSE:MU) was upgraded at Goldman to Neutral from Sell.
Merrill raised eBay (NASDAQ:EBAY) to Buy from Neutral.
Stock futures were mixed in early morning, indicating many on Wall Street would rather wait until Federal Reserve chief Ben Bernanke's testimony before Congress today.
On Tuesday, April Fool's Day, stocks surged following news banks were raising capital and as many believed the credit crisis has reached a crescendo and the worst is over. With that, the Dow industrials nearly 400 points, or 3.2%, the Nasdaq composite climbed 83 points, 3.7% and the S&P 500 surged 47 points, or 3.6%.
Today, though things seem quieter ahead of Bernanke's testimony before a hearing of the Joint Economic Committee of Congress at 9:30 a.m. EDT. Bernanke will also discuss and be questioned on the Fed's role in the fire-sale of Bear Stearns (NYSE: BSC) to JPMorgan Chase (NYSE: JPM) last month and its role as guarantor.
On the economic docket, at 8:15 a.m., the ADP employment report for March will likely show another decline in private sector jobs. This is seen as a precursor to the government jobs report due Friday, but there have been variations in the past. February factory orders will be released at 10 a.m. and although economists predict a decline, the magnitude forecast is much less than February.
The short interest in most large stocks traded on the NYSE increased as measured on March 14. The figures compare to February 29. Car stocks were hit especially hard. Shares short in Ford (NYSE: F) moved up 20.3 million to 248.9 million. For GM (NYSE: GM) the number was up 19.4 million to 85.9 million.
Despite the fact that many big financial stocks are already close to lows, traders were willing to bet that they would fall off further. Shares short in Washington Mutual (NYSE: WM) moved up 15.9 million to 168.8 million. The short interest in Citigroup (NYSE: C) jumped 7 million to 125.6 million. For Wells Fargo (NYSE: WFC) the number added 9.3 million to 117.5 million. For Countrywide (NYSE: CFC) the figure was up 9.3 million to 111.5 million and at Wachovia (NYSE: WB) shares sold short were up 2.2 million to 105.4 million.
Other notable financial stocks with large increases included Fannie Mae (NYSE: FNM), up 11.4 million to 78 million, Thornburg (NYSE: TMA), up 11 million to 25.8 million, and CIT (NYSE: CIT), up 10 million to 20.1 million.
Troubled firms that have recently had bad news were hit very hard. Shares short in Sprint (NYSE: S) moved up more than any other NYSE-traded company, jumping 30.1 million to 75.2 million. Shares sold short in Blockbuster (NYSE: BBI) increased 8 million to 57.8 million.
Shorts moved out of Micron (NYSE: MU) where the number fell 4.3 million to 87.5 million, Wal-Mart (NYSE: WMT) where short interest dropped 3 million shares to 45.1 million, CBS (NYSE: CBS) which lost 2.7 million shares short falling to 29.2 million, The New York Times (NYSE: NYT) with shares short dropped 2.8 million to 30.6 million, and Time Warner (NYSE: TWX) which saw its short interest drop 2.2 million to 38.5 million.
Intel Corp. (NASDAQ: INTC) came out Monday night and warned of lower margins, and while the stock was down in after-hours trading, one might actually make the argument that this might not be such bad news for its core operations. It's just hard to be too much like Dr. Pangloss in what looks, feels, and even smells more and more like a bear market each week. The culprit is listed as "lower than expected NAND flash memory chip prices." So Intel said it is now looking for 54% margins, plus or minus 1%. Its previous guidance was 56%, plus or minus 1%. What is at least a bit of relief here is that Intel said that all other expectations are consistent with the prior guidance given with its last outlook.
I would note that Intel had recently been downgraded at Goldman Sachs and at AmTech. Arguably, this is the second warning if you count last quarter. Its 2% drop is fairly appropriate as that is basically how much the stock is down on the news. Intel closed up 0.2% Monday at $20.01, but it was now seeing shares trade down 2.5% at $19.51 in after-hours evening trades.
If you take this at face value, Intel at least has a robust processor business, or at least it has the best processors in the industry. This news is taking a toll on other semiconductor stocks as well, but as the news bit is specific to NAND flash memory chips, it is hitting those flash memory stocks the worst of the others.
Micron Tech (NYSE: MU) is one that won't be liking this as its turnaround seems to be in jeopardy. This may at least make the company pursue more active issues like divesting some assets. SanDisk Corp. (NASDAQ: SNDK) is perhaps the pure-play for flash memory stocks, and its shares were actually down almost 3.5% at $22.25 in after-hours trading. That was after already hitting a new 52-week low at the close of $23.05 as its trading range over the last year was $23.40 to $59.75. Spansion Inc. (NASDAQ: SPSN) is another go-to stock in flash memory. Its shares were down almost 3% in after-hours trading at $2.82 after having an almost 6% gain today. Unfortunately, it has had a poor year with its 52-week trading being $2.69 to $12.83.
MOST NOTEWORTHY: NICE Systems, Watson Pharmaceuticals and Micron Tech were today's noteworthy upgrades:
NICE Systems (NASDAQ: NICE) was upgraded to Buy from Neutral at UBS, as they believe NICE is well-positioned to leverage its offerings in VoIP recording, call centre analytics, and other applications with its extensive enterprise customer base.
Hambrecht upgraded shares of Watson Pharmaceuticals (NYSE: WPI) to Buy from Hold ahead of the company's Q4 results to reflect valuation and low expectations.
Thomas Weisel upgraded Micron Tech (NYSE: MU) to Overweight from Market Weight citing expectations DRAM pricing will stabilize in 2008, potential upside from high growth DRAM segments such as mobile, and notes cost cutting efforts and valuation.
OTHER UPGRADES:
JP Morgan added Wabtec (NYSE: WAB) to its Focus List.
Keefe Bruyette raised Franklin Bank (NASDAQ: FBTX) to Market Perform from Underperform.
Morgan Stanley upgraded Wyeth (NYSE: WYE) to Overweight from Equal Weight.
Citigroup upgraded Mentor Graphics (NASDAQ: MENT) to Buy from Hold and added shares to its Top Picks List.
Bear Stearns downgraded UBS (NYSE: UBS) to "peer perform" from "out perform" according toBriefing.com. The news service also reports that Thomas Weisel upgraded Micron (NYSE: MU) from "market weight" to "overweight."
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: Micron, Chico's FAS and Lifetime Brands were today's noteworthy initiations:
Oppenheimer assumed Micron (NYSE: MU) with an Outperform rating and $9.50 target, as they believe price declines in the DRAM market moderated in 2H of the December quarter and that concerns of oversupply are already priced into shares.
Stanford believes shares of Chico's FAS (NYSE: CHS) will remain under pressure over the next three to six months given the adverse economic conditions and the company's "less-than-exciting" fashion assortment. The firm started shares with a Hold rating and $10 target.
Lifetime Brands (NASDAQ: LCUT) was initiated with a Neutral rating at SunTrust. The firm prefers to wait for greater visibility on the U.S. consumer spending environment before becoming more constructive on the name.
OTHER INITIATIONS:
Soleil initiated Worthington (NYSE: WOR) with a Hold rating.
MOST NOTEWORTHY: UBS AG (UBS), Network Appliance (NTAP) and Semiconductors were today's noteworthy downgrades:
Deutsche Bank downgraded UBS AG (NYSE:UBS) to Hold from Buy following the company's earnings reports to reflect its large new risk exposures.
Citigroup lowered Network Appliance (NASDAQ:NTAP) to Hold from Buy, as they believe the company's lackluster outlook will weigh on shares in the near-term.
Semiconductors Micron Tech (NYSE:MU) and Novellus (NASDAQ:NVLS) were downgraded to Sell from Neutral at Goldman citing expectations of excess DRAM supply.
OTHER DOWNGRADES:
Goldman removed Intel (NASDAQ:INTC) from its Conviction Buy List.
JP Morgan lowered Knot Inc (NASDAQ:KNOT) to Neutral from Overweight.
Morgan Stanley lowered Boardwalk Pipeline (NYSE:BWP) to Equal Weight from Overweight.
With Macworld is a couple of weeks away, speculation grows as to what Apple Inc. (NASDAQ: AAPL) CEO Steve Jobs could introduce this year, given his tradition of showcasing new products during the Expo. It seems the agreement among analysts and Apple enthusiast is on a slimmed-down laptop to capitalize on the MacBook success, as well as a higher-capacity model of the iPhone.
The Wall Street Journal has reported that "U.S. regulators, led by the Securities and Exchange Commission, are probing how financial firms priced mortgage securities on their books and whether they should have told investors earlier about the declining value of those securities." Among the companies the SEC is probing is UBS AG (NYSE: UBS) and Morgan Stanley (NYSE: MS). Merrill Lynch & Co Inc (NYSE: MER) and Bear Stearns Co Inc (NYSE: BSC) have already been reported to be under investigation.
Cisco Systems Inc. (NASDQ: CSCO) changed its management structure where a "development council" composed of several executives will replace Cisco Systems Inc. CEO heir-apparent Charles Giancarlo, who has resigned.
Goldman Sachs has a Neutral rating on MU and says: "The Street continues to call the bottom in the stock, we do not expect the shares to fully bottom until the excess DRAM capacity is significantly reduced."
MU December 7 straddle is priced at $1.10. MU January option implied volatility of 57 is above its 26-week average of 44 according to Track Data, indicating larger price risk.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Rambus Inc. (NASDAQ: RMBS) said it was notified by the SEC that it had ended its formal investigation into the company's past stock options practices. RMBS closed at $19.84. RMBS has upcoming patent infringement and anti-trust claim issues in 2008. RMBS January option implied volatility is 54 and May is at 74. RMBS average option implied volatility over the last 26-weeks is 64 according to Track Data, suggesting larger price movement.
Micron Technology Inc. (NYSE: MU) is recently up 18 cents to $9.13. MU has been frequently mentioned as takeover candidate over the last 18-months. MU December and January option implied volatility of 57 is above its 26-week average of 42 according to Track Data, indicating larger price risk.
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Stock futures were mixed in early morning, indicating many on Wall Street would rather wait until Federal Reserve chief Ben Bernanke's testimony before Congress today.
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