UBS upgraded Pacific Sunwear (NASDAQ: PSUN) to Neutral from Sell and said liquidity is no longer a near-term concern. The firm lowered Pacific Sunwear's target to $1.50 from $3. Citigroup upgraded shares to Hold from Sell on valuation following the recent weakness and believes Pacific Sunwear has sufficient liquidity to remain a going concern.
Calyon believes Reliant Energy (NYSE: RRI) will be successful in unwinding the Merrill Lynch Retail credit sleeve and obtaining alternative collateral. The firm upgraded shares to Buy from Add.
JP Morgan said Cogent's (NASDAQ: COGT) position in homeland security and the defense markets make it less sensitive to an economic downturn, making valuation attractive. JP Morgan upgraded shares to Overweight from Neutral and raised its target to $13 from $10.50.
Goldman added Research in Motion (NASDAQ: RIMM) to its Conviction Buy List and removed Riverbed (NASDAQ: RVBD) from the Conviction Sell List.
J.M. Smucker (NYSE: SJM) was raised to Buy from Underperform at Merrill Lynch.
St. Jude Medical (NYSE: STJ) designs, manufactures, and distributes medical devices for heart-related and neurological conditions. The firm's Cardiac Rhythm Management segment makes pacemakers and implantable cardioverter defibrillators, to regulate heart rhythm. The Neuromodulation unit develops pacemaker-like implantable systems to treat chronic, intractable pain, and other nervous system disorders. The Cardiovascular division offers therapies and technologies for treating people with cardiovascular and peripheral vascular disease. The Atrial Fibrillation segment develops products to diagnose, treat, and seek a cure for atrial fibrillation. Boston Scientific (NYSE: BSX) is a major competitor.
The company pleased investors last week, when it reported Q2 EPS of 60 cents and revenues of $1.14 billion. Analysts had been expecting 55 cents and $1.06 billion. The CEO noted that revenue exceeded guidance in every business category. Management also guided Q3 EPS to 56-58 cents (53 cent consensus) and FY08 EPS to $2.28-$2.33 ($2.19 consensus).
MOST NOTEWORTHY: Pericom, St. Jude Medical and CDC Corp were today's noteworthy initiations:
B. Riley believes Pericom (NASDAQ: PSEM) is in the early stages of a product cycle-driven growth and feels shares are significantly undervalued at current levels. The firm started shares with a Buy rating and $18 target.
Rodman & Renshaw started St. Jude Medical (NYSE: STJ) with a Market Outperform rating and $50 target. The firm is positive on St. Jude's recent investments in its CRM product portfolio and sales organization, which should increase competitiveness and facilitates continued market share gains.
CDC Corp (NASDAQ: CHINA) was initiated at Cantor with a Buy rating and $6 target, as they believe the stock is significantly undervalued due to the complexity of the company's corporate structure and poor financial disclosure. The firm believes this gap will close after the company lists at least one of its subsidiaries this year.
OTHER INITIATIONS:
Kevin Dann initiated Orion Marine Group (NASDAQ: OMGI) with a Buy rating and $18 target.
MOST NOTEWORTHY: CTC Media, Callidus Software and Seattle Genetics were today's noteworthy initiations:
Merrill initiated CTC Media (NASDAQ: CTCM) with a Buy rating, citing the company's healthy ad growth outlook and substantial barriers to entry.
B. Riley initiated Callidus Software (NASDAQ: CALD) with a Buy rating and $7 target and believes the company's growing On-Demand offering is being overlooked by investors.
Seattle Genetics (NASDAQ: SGEN) was assumed with an Overweight rating at JP Morgan. The firm views the company as an attractive investment opportunity given the company's growing pipeline of differentiated antibody therapies and partnership with Genentech (NYSE: DNA).
OTHER INITIATIONS:
Cowen initiated Boston Scientific (NYSE: BSX) with a Neutral rating and St. Jude Medical (NYSE: STJ) with an Outperform rating.
Lehman initiated UDR Inc (NYSE: UDR) with an Equal Weight rating.
As the U.S. baby boom generation ages, demand for medical services is likely to increase, which is good news for St. Jude Medical.
St. Jude Medical (NYSE: STJ) develops and markets devices that treat cardiovascular disease and is also one of the world's leading manufacturers of mechanical heart valves.
St. Jude Medical's core business is its cardiac rhythm management division, which includes pacemakers, implantable cardioverter defibrillators [ICDs] and other equipment to regulate heart rhythm.
In general, analysts believe new product introductions and enhancements to existing products will allow STJ to increase its ICD market share in 2008, with overall company revenues advancing 13-17%. The Reuters F2007/F2008 EPS consensus estimates for STJ are $1.80/$2.09.
The risks? Analysts are keeping an eye on STJ's new product roll-out timetable. Further, negative changes to Medicare reimbursement rates would also hurt STJ's results.
The First Call mean rating for STJ is: Buy [25 firms]. Mean 2008 target: $47.00 [high: $54, low: $40].
Stock Analysis: St Jude Medical is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from STJ's shares. Sell / Stop Loss if you were to purchase shares in this company: $28.
MOST NOTEWORTHY: News Corp, Limelight Networks, Corning and Carmike Cinemas were today's noteworthy initiations:
RBC Capital is positive on News Corporation's (NYSE: NWS) strategy of investing cash flow away from mature enterprises to fund high-growth initiatives such as Sky Italia and Fox Interactive Media. The firm initiated shares with an Outperform rating and $26 target.
Kaufman Brothers rates Limelight Networks Inc (NASDAQ: LLNW) a Sell based on a significant increase in the competitive environment with Akamai discounting on large deals, Level 3 Communications Inc (NASDAQ: LVLT) introducing a competitive offering in November 2007, Korean major-CD Networks becoming aggressive, and new entrants becoming aggressive with their value propositions.
Deutsche Bank initiated Corning Inc (NYSE: GLW) with a Buy rating and $31 target as they believe shares are fundamentally undervalued given the company's strong fundamentals and promising outlook.
Carmike Cinemas Inc (NASDAQ: CKEC) was started at JP Morgan with an Overweight rating. The firm said the company is the most exposed to 3-D, which could lead to potential upside due to low margins and leverage capital structure.
OTHER INITIATIONS:
UBS started shares of St. Jude Medical Inc (NYSE: STJ) with a Sell rating and $43 target and shares of Medtronic Inc (NYSE: MDT) with a Buy rating and $64 target.
MOST NOTEWORTHY: Boston Scientific (BSX), Medtronic (MDT), St. Jude Medical (STJ), Bankrate (RATE) and AXA (AXA) were today's noteworthy initiations:
Thomas Wiesel initiated coverage of the Medical Devices Industry:
Boston Scientific (NYSE: BSX) was initiated with an Underweight rating, expecting shares to Underperform peers due to reductions in estimates, risks to the stent business and valuation.
Medtronic (NYSE: MDT) was initiated with an Overweight rating, saying attractively valued as they believe the growth in underlying markets may be more robust than the current sentiment suggests.
St. Jude Medical (NYSE: SJT) was initiated with an Overweight rating, saying shares offer exposure to attractive drivers, a management team with the best track record in the segment, and a potential acquisition candidate.
Stephens believes the recent weakness in Bankrate (NASDAQ: RATE) due to "turmoil" in the market has created an attractive entry point, starting shares with an Overweight rating.
Morgan Stanley assumed coverage of AXA (NYSE: AXA) with an Overweight rating, citing an attractive risk/reward and strong free cash flow...
OTHER INITIATIONS:
S1 Corp (NASDAQ: SONE) was initiated with a Market Perform rating at Avondale.
MOST NOTEWORTHY: MoneyGram (MGI), F5 Networks (FFIV), ARK Restaurants (ARKR), Nara Bancorp (NARA) and St. Jude Medical (STJ) were today's noteworthy initiations:
AG Edwards initiated MoneyGram (NYSE: MGI) with a Buy rating because it believes the recent pullback in the shares provides an attractive entry point; Stephens started shares of MoneyGram with an Overweight rating, and believes the company is well positioned to create strong transactional growth and take market share.
CIBC expects F5 Networks (NASDAQ: FFIV) to benefit from strong fundamentals in application networking solutions and started shares with a Sector Outperformer rating and $85 target.
Morgan Joseph initiated ARK Restaurants (NASDAQ: ARKR) with a Buy rating and $43 target; they believe ARK is well positioned to benefit from strong SSS & earnings leverage given its strong store locations, wide ranging price points, and stable unit development pipeline.
Sandler is positive on Nara Bancorp (NASDAQ: NARA), starting shares with a Buy rating and $17 target, based on the company's long-term prospects.
ThinkEquity believes St. Jude Medical (NYSE: STJ) is poised to take market share in the ICD markets and started shares with a Buy rating and $56 target...
Being a particularly hard-working organ, the heart can be subject to bouts of irregular behavior. A world leader in the development and application of technologies designed to keep the heart running smoothly is headquartered in St. Paul, Minnesota.
St. Jude Medical Inc. (NYSE: STJ) designs, manufactures, and distributes medical devices for heart-related and neurological conditions. The firm's Cardiac Rhythm Management segment makes pacemakers and implantable cardioverter defibrillators, to regulate heart rhythm. The Neuromodulation unit develops pacemaker-like implantable systems to treat chronic, intractable pain, and other nervous system disorders. The Cardiovascular division offers therapies and technologies for treating people with cardiovascular and peripheral vascular disease. The Atrial Fibrillation segment develops products to diagnose, treat, and seek a cure for atrial fibrillation. Boston Scientific (NYSE: BSX) is a major competitor.
The company pleased investors last week, when it reported Q2 EPS of 45 cents and revenues of $947 million. Analysts had been expecting 43 cents and $909.8 million. Management also guided Q3 EPS to 44-45 cents (45 cent consensus) and FY07 EPS to $1.74-$1.78 ($1.75 consensus). Wachovia subsequently upgraded the shares to "outperform" and Jefferies termed the valuation "attractive." The stock popped into a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers now recommend the issue with four "strong buys," nine "buys," nine "holds" and one "sell." Analysts see a 17% average annual growth rate, through the next five years. The STJ Sales Growth rate (13.69%), EPS Growth rate (18.42%), Operating Margin (21.46%), Net Profit Margin (15.65%), Return on Assets (11.12%), Return on Investment (13.68%) and Return on Equity (21.82%) compare favorably with industry, sector and S&P 500 averages.
The stock is one of those used to calculate the S&P 500 Index. Institutional investors hold about 80% of the outstanding shares. Over the past 52 weeks, STJ has traded between $32.33 and $45.39. A stop-loss of $39.50 looks good here.
MOST NOTEWORTHY: St. Jude Medical (STJ), Juniper Networks (JNPR), Satyam Computer (SAY), Clearwire (CLWR) and Citrix Systems (CTXS) were today's noteworthy upgrades:
St. Jude Medical's (NYSE: STJ) upgrade to Outperform from Market Perform at Wachovia was based on signs of an ICD recovery and reasonable valuation.
Baird upgraded shares of Juniper (NASDAQ: JNPR) to Outperform from Neutral following better-than-expected guidance; Goldman upgraded Juniper to Buy from Neutral.
Satyam (NYSE: SAY) was upgraded to Positive from Neutral at Susquehanna citing better than expected growth.
Clearwire (NASDAQ: CLWR) was upgraded to Outperform from Peer Perform at Bear Stearns following the announcement that Sprint (S) and Clearwire will form a Nationwide 4G/Wimax Network.
Citrix (NASDAQ: CTXS) was upgraded at Jefferies to Buy from Hold as they believe the strong customer response to Presentation Server Platinum Edition and the pipeline buildup related to NetScaler 8.0 bode well for the second half of 2007...
OTHER UPGRADES:
Lehman raised DSW Inc (NYSE: DSW) to Overweight from Equal-Weight.
Goldman upgraded shares of Labor Ready (NYSE: LRW) to Neutral from Sell.
Rodman upgraded shares of Encysive Pharma (NASDAQ: ENCY) to Market Perform from Underperform.
On today's STOP TRADING segment on CNBC, Jim Cramer said many medical stocks have bottomed out; even some where he had been "long and wrong."
St. Jude Medical Inc. (NYSE:STJ) would be an ideal buyout candidate if you believed the bad news was priced in the shares, according to Cramer, who urged people to buy both options and shares. Cramer even said Amgen Inc. (NASDAQ:AMGN) and Boston Scientific Corp. (NASDAQ:BSX) might be worth considering since their shares aren't being hurt by negative news. He has been defending Amgen for some time. Here is something he noted on it back in late January when he helped push it up to $70.85. Shares are now down to $60.00 and have dipped down close to $55.00. Boston Scientific and St. Jude are both up more than $2.00 from their lows.
His positive call on Boston Scientific has proven right. The question is whether lightning will also strike with St. Jude, up about 14% this year.
Cramer noted Costco Wholesale Corp. (NASDAQ:COST) and Sears Holdings Corp. (NASDAQ:SHLD) positively. He remains negative on homebuilders, arguing that increased housing starts results in more inventory they can't sell.
MOST NOTEWORTHY: Costco Wholesale Corp (COST), Apple Inc (AAPL), DirecTV Group, Inc (DTV) and EchoStar Communications (DISH) were today's more noteworthy upgrades:
Piper Jaffray upgraded shares of Costco Wholesale Corp (NASDAQ: COST) to Outperform from Market Perform with a $65 target to reflect valuation, improved fundamentals and hidden value in real estate.
Apple Inc (NASDAQ: AAPL) was added to American Technology's Focus List with a $145 target.
Cowen upgraded shares of DirecTV Group, Inc (NYSE: DTV) and EchoStar Communications (NASDAQ: DISH) to Neutral from Underperform citing potential cash flow growth and re-capitalization opportunities that will offset competitive risks in the near-term.
OTHER UPGRADES:
Con-Way Inc (NYSE: CNW) was upgraded to Overweight from Equal Weight at Stephens citing a tonnage rebound at the company.
Bear Stearns transferred coverage and raised its rating of Netease.com, Inc (NASDAQ: NTES) to Outperform from Peer Perform citing valuation.
Bernstein upgraded its Cardiac Rhythm Management group, which contained Boston Scientific Corp (NYSE: BSX), Medtronic, Inc (NYSE: MDT) and St. Jude Medical, Inc (NYSE: STJ), to Outperform from Market Perform. The firm cited anticipated recovery of the ICD market and easier comps for 2007 and expects the U.S. ICD market to have 10% growth compared to last year's negative growth.
JP Morgan upgraded Borland Software Corp (NASDAQ: BORL) to Overweight from Underweight, as the firm expects the company to achieve margin targets and named Borland its turnaround pick for 2007.
Oracle Corp. (NASDAQ:ORCL) has filed suit against giant German software company and its number one rival SAP AG (NYSE:SAP). This is going to be interesting as the details unfold. The suit was filed in U.S. District court in San Francisco, Oracle's backyard. Oracle claims that SAP used mutual customers' password codes to enter the Oracle's main web support site to steal and download software code.
This is almost funny and really does not make much sense:
The mega applications company SAP has been the undisputed worldwide leader in business applications, from HR applications to financial applications to business processes applications. SAP is renowned for its superior research and development work and innovation of its product set from the inside. Oracle, on the other hand, is the undisputed leader in database software, world-wide, and very mediocre when it comes to the applications business.
Oracle's past ten years of research and development efforts have been so dismal that the company had to resort to many acquisitions to fill the gap. Oracle has spent $20 billion on 30 different acquisitions the past three years. It is certainly making in-roads compared to SAP in the applications business, but it is still in a distant second place.
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Analyst upgrades:
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had been expecting 43 cents and $909.8 million. Management also guided Q3 EPS to 44-45 cents (45 cent consensus) and FY07 EPS to $1.74-$1.78 ($1.75 consensus). Wachovia subsequently upgraded the shares to "outperform" and Jefferies termed the valuation "attractive." The stock popped into a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Waiting for the other shoe to drop: The looming credit crisis
Closing Bell: Dow down 7.7%; GE, YHOO, MS fall, PGI, MNT soar
Bet on T&A with J&J (JNJ)
